MILLINOCKET, Maine — Town leaders agreed Thursday to file tax liens on Cate Street Capital and Specialty Minerals Inc. to stem tax delinquency and maintain the town’s stake in some taxable assets.
Town councilors also agreed during the meeting to cut $322,000 of $644,000 in medical benefits the School Department pays retirees, sharply criticizing school board members for the $6.6 million budget they proposed for the 2013-14 fiscal year.
The decisions stem from town government’s cash shortage. About $800,000 is on hand, enough to fund schools and government services for another few weeks. Neither decision fixes that, but both signal how dire the town’s finances are, councilors said.
“We cannot continue to borrow money or add to our debt,” Councilor Jimmy Busque said. “Fixing this will take a lot of work and be hard on everybody.”
The $322,000 cut reduces the school budget to $6.2 million, Town Manager Peggy Daigle said. It reduces what would have been a 31.18 mill rate to 29.92 mills for the fiscal year, which begins July 1.
Under the town’s present 26.4 mill rate, owners of $50,000 properties pay $1,320 in property tax annually. At 29.92, they would pay $1,496, about $63 less than with a 31.18 mill rate.
Councilors approved the $6.2 million municipal government budget for the 2013-14 fiscal year, which begins July 1. That included a $1 million allocation to the town’s fund balance.
“The town could really use a $2 million fund balance, but I don’t think taxpayers would want to pay a mill rate that is in the 40s,” Daigle said.
“I have never been in a town where I have had to raise the fund balance just for the town’s checking account,” Daigle added. “The goal would be, and I am not going to promise it, to not see this again next year.”
The fund from which most town government bills are paid, the reserve account is a baseline indicator of a town’s financial health. Millinocket should have a $3 million to $4.5 million fund balance. The low balance threatens its ability to secure loans, make payroll and handle emergencies, Daigle has said.
Cate Street is delinquent on a $450,000 property tax payment for the second half of the fiscal year. It was due April 1, Daigle has said. The company or its subsidiaries own the mill site on Katahdin Avenue.
Specialty Minerals has paid its $106,665 annual bill, but plans to remove equipment from the mill site this summer. The company filtered calcium carbonates from the shuttered mill’s wastewater.
Its liens would ensure that the town is paid for equipment still onsite, Daigle said.
The council took several other steps to bolster the town’s cash reserves.
Councilors agreed to withhold until August the town’s $11,416 monthly health plan reimbursement paid to a dozen town retirees and its $53,666 monthly payment to 93 school retirees. Several smaller accounts also will go unpaid.
Negotiations with retirees would be fruitful and dispel misinformation about the retiree plan, school Superintendent Kenneth Smith said. He defended the school budget as a compromise between what people need and can afford.
The retirees, Smith said, “worked in this town and they earned a benefit. They are not here today working but they worked here for many, many years to earn that benefit.”
“We brought this up year after year, I think for as long as I have been a council member,” Busque responded. “This is an area that should have been addressed a long time ago, but they [school board members] simply didn’t have the stomach.”
The retiree benefits cut has no impact on the quality of the education offered town students, Busque said.
School board Chairman Kevin Gregory, who did not attend the meeting, declined to comment on the council’s actions.
Councilors approved Daigle’s plan to pursue foreclosure sales of 24 properties in the fall.
Councilors will meet on Tuesday to approve the spending resolves that would make the budgets final. The validation vote will occur on July 9, and tax bills will be mailed that week.