Millinocket looking at tax increase despite deep budget cuts

Posted Aug. 12, 2013, at 7:30 p.m.
Margaret &quotPeggy" Daigle
Natalie Bazinet | Aroostook Republican
Margaret "Peggy" Daigle

MILLINOCKET, Maine — Taxes will rise about $155 for owners of $50,000 homes this year if voters approve a school budget that town leaders reduced by about $324,000, Town Manager Peggy Daigle said Monday.

Town Council members approved cuts totaling slightly more than $1 million from the town and school budgets on Thursday in their attempt to diminish the impact of vast cuts in funding state government shares with municipalities, Daigle said.

The school budget validation vote will is set for Tuesday, Aug. 20 from 8 a.m. to 8 p.m. at Stearns High School. Daigle said she fears that voters could force town government over the fiscal cliff by rejecting the proposed school budget for a second time.

“I have been looking at our cash flow projections, and the longer we go out to get to a budget, the closer we come to hitting the wall of having no cash to run on,” Daigle said Monday. “People are probably getting tired of hearing it, but when I look at cash flow, these are real numbers I am looking at.”

The town had as of Monday a cash balance of about $600,000, though it dropped to $400,000 within the last two weeks, Daigle said. She announced the town had a cash flow shortage of about $3 million to $4.5 million in mid-June that was caused partly by the delinquency of the town’s top taxpayer, state revenue losses, sluggish property tax defaults and sluggish collections, and some budget overruns.

Town leaders have met with bankruptcy attorneys as part of determining the best course forward, though no bankruptcy filings are planned. The town operates on about $1.3 million per month, Daigle has said.

Despite the latest round of cuts, the town’s mill rate is expected to climb from 26.4 mills to about 29.5, she said. At 26.4 mills, owners of $50,000 properties pay $1,320 annually. At the new rate, they would pay $1,475.

Town Council Chairman John Davis and Kevin Gregory, the school board’s chairman, did not return messages seeking comment on Monday.

The latest round of cuts will leave the town’s Spruce Street garage unheated in winter, saving $8,500 in fuel, and only Airport Road paved next year, which saves about $129,000, Daigle said. Councilors also cut $14,900 from the town’s charity fund.

Since budget season began, the town’s budget dropped from $6.7 million to $6 million and the school budget fell from $6.57 million to $6.3 million, Daigle said. The town and school budgets for the 2013-14 budget year, which began July 1, are now lower than they were the previous year, but the state revenue-sharing cuts leave taxpayers paying more property taxes.

The council also opted to cut $324,000 from the school budget, intending but not ordering the money to come from a school department retiree account. Under the town charter, the school board sets school policy and determines how to spend the funds the council apportions for schools.

Some school board members have been opposed to cutting the retiree benefits, saying that the workers earned the benefits and the town is essentially breaking its word to them. Councilors have said that they regret the decision but find no alternative open to them except cutting education programs, which would harm students.

Cate Street Capital, which owns the industrial park and shut down paper mill on Katahdin Avenue, has promised to pay at least part of the $900,000 it owes the town in property taxes by mid-August.

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