MADAWASKA, Maine — As municipal and school officials look to set the upcoming fiscal year budget effective July 1, they are hoping for the best while preparing for the worst.
Addressing Thursday afternoon’s school committee meeting, Town Manager Christine Therrien painted a worst-case funding scenario from the loss of state revenues in Gov. Paul LePage’s proposed budget.
With LePage’s current budget proposal containing language to eliminate traditional state funding sources for municipalities including business equipment tax adjustments, commercial excise tax, revenue sharing, the circuit-breaker program and the homestead exemption fund, Therrien said she has no idea just how much revenue Madawaska and the school department can expect to receive this year.
And she won’t know until lawmakers pass a final two-year state budget.
Lawmakers are expected to address the budget in April. In the meantime, according to a release from the Maine People’s Alliance, Madawaska town selectmen are looking to join 47 other Maine towns in passing a resolution rejecting LePage’s proposed cuts and urging lawmakers to consider tax fairness as an alternative to increasing property taxes and cutting essential services.
Compounding the issue, according to Therrien, Madawaska has faced $2.6 million in revenue losses stemming from property value reductions and tax abatements granted to Twin Rivers Paper Company, reducing its valuation from $170 million to $85 million during a four-year period beginning in fiscal year 2010.
The is the final year of the phasing in of the adjustments, Therrien said, and for FY 2013-14, represents a loss close to $500,000, which will be split evenly between the town and school department.
“Without the mill issue, it would be tough but we could probably handle the loss of state revenues,” Therrien said. “But combined, I am looking at a funding loss equivalent to one municipal department. It really is the perfect storm for us.”
Since making its initial valuation abatement request in 2010, Twin Rivers paper mill — formerly Fraser Paper, Inc. — received an initial $25 million valuation reduction, bringing the total valuation to $145 million in fiscal year 2011. Twin Rivers had been looking for a $130 million reduction, which would have dropped the mill’s overall valuation to $40 million.
Instead, the Madawaska Board of Selectmen agreed to assess a valuation of $105 million for FY 2011-2012 and reduce that assessment to $85 million for FY 2013-2014.
Last fall, mill officials notified the town they are seeking an additional valuation abatement to bring the facility’s overall value to around $40 million with an appeal to the state board of property tax review.
That review is pending, Therrien said Thursday.
“Twin Rivers Paper Company filed an [abatement] appeal on September 6, 2012,” Twin Rivers director of communications Louise Merriman said in an email on Wednesday. “To be respective of the process, we cannot comment on any details. However, we are confident that we can continue our collaborative relationship with the town of Madawaska, which has been understanding of the situation.”
Twin Rivers Paper Company is a specialty paper company which is the largest Maine-based manufacturing facility north of Bangor and has been an economic engine for the community for more than 80 years, according to Merriman.
“We employ nearly 1,200 people, with over 600 in Madawaska,” she said in her email.
School officials have been grappling with known and anticipated funding figures for several weeks in forming their new budget and on Thursday Superintendent Terry Wood said “everything is on the table at this point,” including staff reductions, program cuts and even cutting her own position to part-time.
The school department, which only completed its current budget in January, after cutting 10 teaching and staff positions, reducing hours, instituting furlough days and eliminating some programs, is now looking at cutting or finding ways to make up what could be $750,000 in lost revenue for the next year, Wood said.
However, that amount could be mitigated through staff retirements, reduction in insurance rates and receiving up to $300,000 from the state’s Sudden and Severe Impact Fund, leaving the school looking at $478,000 less funding from last year, according to Wood.
Sudden and Severe Impact funds are state money given to municipalities that suffer severe tax valuation losses, such as those caused by the devaluation of Twin Rivers.
Despite the uncertainty of state funding, Wood said she is ready to begin “plugging numbers into the budget.”
Not all board members agreed.
“My fear is we put these numbers out to the public and then the state tells us [the reductions in funding] are not as much as we thought,” school committee vice chairman Roger Thibodeau said. “What do we tell the community then? We have to wait until we have the final figures.”
Given that those figures may not be known for at least a month, Wood said, the school committee can’t afford to wait if they want to have a final budget to present to voters at the June town meeting.
Therrien is not confident that can happen.
“You can only do what you can do,” she said. “It would really surprise me if [the state] has a budget deal by April and I will be truly surprised if we can have town meeting in June.”
Right now, she said, lack of concrete budget funding information from Augusta is “like trying to walk on shifting sand.”
Both Wood and Therrien said they heard the voters’ sentiments loud and clear last year and will do everything in their power to avoid raising local taxes.
Getting the public involved in the budget process, the two women said, may help meet that goal.
“Maybe we could have a public meeting in which members of the public could tell us what they would like to see cut last from the [school] budget,” Wood said. “It would give them a voice.”
The superintendent and town manager are also hoping to work closer together this year in formulating their budgets, with better communication between the town and school department as that process moves forward.
Therrien attending the board meeting Thursday is a good step in that direction, Wood said.
“I think it was a very good thing having her here,” Wood said. “We have to work together and putting the budgets together this year has got to be a team effort.”
“When meetings fall on days that my schedule allows me to attend, I will do so,” Therrien said. “I want to be more involved.”
Also working wtih the school committe on the budgetary process with input and suggestions are the members of the Madawaska Education Association, which hopes to keep the communtiy informed through its website at http://madawaskaea.webs.com/.