Millinocket keeps going despite cash-flow problems

Posted July 10, 2013, at 7:31 p.m.
Town Manager Peggy Daigle
Natalie Bazinet | Aroostook Republican
Town Manager Peggy Daigle

MILLINOCKET, Maine — Even with a cash-flow crunch that many felt might have forced a town government shutdown by now, Millinocket seems to be surviving, town leaders said Wednesday.

Three weeks after saying that town’s reserve account contained only $800,000, enough to operate schools and town government for two or three weeks, Town Manager Peggy Daigle said that the town is maintaining that reserve fund balance.

“There are little amounts of money coming in that keep us hovering in the $800,000 range,” Daigle said.

Cost cutting, delayed payments to vendors and retirees — plus revenue from tax payments and routine town government services, such as motor vehicle registrations — are keeping Millinocket afloat, officials said.

“So far we have been able to keep our heads above water,” Town Council Chairman John Davis said. “That’s about it.”

Bankruptcy protection “is not on the table,” Daigle said. “We will not go there at this point, but we will explore all the options when the timing is right.”

The fund from which most town government bills are paid, the reserve account is a baseline indicator of a town’s financial health. Daigle announced on June 17 that Millinocket, which she said should have a $3 million to $4.5 million fund balance, had about $800,000. The low balance threatens its ability to secure loans, make payroll and handle emergencies, Daigle has said.

Voters’ rejection of the proposed $6.2 million school budget during a validation vote on Tuesday night doesn’t help matters, town and school officials said.

Vote totals released Wednesday show that voters disapproved of the budget by a 325-271 margin. The second question, on whether to continue validation votes for another three years, passed 399-185.

“We will have to try again,” school committee Chairman Kevin Gregory said Wednesday. “I am glad it failed.”

Councilors cut the school department’s $6.6 million budget proposal last week by about $322,000, an action Gregory opposes. Superintendent Kenneth Smith said the $6.2 million budget would harm education by forcing the elimination of five teacher positions and three programs. He did not specify the programs or positions.

Councilors, and school board member Matthew Farrington, believe the cutting of the $322,000 from $644,000 in medical benefits the School Department pays retirees would not harm the education provided students. School board members said that cut cannot legally be made unilaterally.

Gregory called the benefit cut “against everything I stand for” and said the council’s budget would “devastate” educational programs.

A supporter of the council budget, Farrington said he believes that some board members are too influenced by the teachers union. He proposes three administrative cuts totaling about $138,000: the elimination of Smith’s $10,000 health care benefits stipend; a $48,000 savings from combining the Stearns High School and Granite Street School principal’s positions; and a $48,000 savings from allowing Medway schools to bus town students to Region III.

“The board feels that no matter what we do, the town council will tell us to cut more,” said Farrington of the history of animosity between the school board and council. “This time we are in dire straits. We are losing money hand over fist.”

The school board will meet Tuesday to resume budget talks, Gregory said. Councilors will meet Thursday and discuss town finances.

Daigle said she believes town officials can maintain the $800,000 fund balance for several more weeks but worries that things will worsen in August when invoices from school supply vendors come due.

“Our vendors are only going to be [left unpaid] for so long,” Daigle said. “If this continues, we are either going to have a furlough [of town workers] of some sort or we will have to come back and cut our budget or operations.”

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