MADAWASKA– How does a town plan for a budget when no one knows how much money is going to be available? That’s the situation right now in Madawaska as councilors wait to find out what will happen with the recent $2.2 million abatement request by the town’s largest employer, Twin Rivers Paper Company.
Councilors held a special meeting Thursday, April 26 where they invited the budget committee and the school committee to share information on the issue of a potential major shortfall in the town’s upcoming budget. The amount of the abatement request represents roughly a third of the town’s overall budget, and as budget season is well underway, it poses a particularly difficult obstacle to overcome in planning the finances for the upcoming year.
“We don’t have a whole lot of information, aside from it’s going to be a serious sting,” said Council Chair Don Chasse.
Twin Rivers asked the council to consider changing the formula they use for the company’s tax assessment last fall, and the town hired Maine assessment expert William Van Tuinen of Madison to research the request.
The state of Maine, according to Town Manager Christine Therrien, provides three methods of evaluation for figuring local taxes on businesses, the market approach, the cost approach, and the income approach. Each method utilizes a complex formula for assessing a tax, and the variations from using one approach over another can literally result in millions of dollars of difference, depending on the size of the business. In the past, Madawaska has assessed Twin Rivers using the cost method. Now the mill would like the town to consider switching their assessment method to the income approach. Therrien said the income approach is difficult to assess because there are so many factors involved, and unique border issues bring even more factors that could influence how much the mill would pay for taxes if assessed under this method.
Chasse said that confidentiality issues with the paperwork have presented a hurdle to moving forward in the review process, bringing the town’s budget planning to a halt. It could be months before Van Tuinen has all of the information he needs to present his report to the councilors so that they can make a decision on the mill’s request.
“Without knowing the numbers, we’re at a standstill,” said Chasse.
Therrien has asked, as each town department prepares their budget, that they plan for three scenarios, a 75-percent, a 50-percent, and a 25-percent reduction in the budget.
“Until we get more info,” explained Chasse, “that’s where we’re at.”
Chasse said that because the councilors will be unable to consider the request until likely after the town’s annual meeting where voters typically approve the year’s budget, the council is considering holding a special town meeting this year where they will ask voters to approve a temporary, shorter-term budget so the town can continue to function until they have a better idea of what tax income they will receive. He said that, in the meantime, the school department will have to share in some of the potential budget shortfall.
To complicate matters, if the town council decides to deny the abatement request, under state law the mill can file an appeal, a process that can take up to three years. If, for whatever reason, the mill won the appeal three years down the road, not only would the town be looking at losing a third of their budget from that point forward, but they would also be responsible for paying back the three previous years’ worth of payments to the mill – the equivalent of the town’s entire year budget.
Therrien warned that the potential impact of ignoring this issue, or failing to take it into serious consideration could be dire.
“You’re touching essential services and making some tough choices,” she said.
Madawaska Superintendent Terry Wood told the council that the school committee is taking all of the information under advisement. The department is currently in contract negotiations and examining multiple scenarios searching for cost savings and areas to cut in the budget.
“We froze our budget in September,” said Wood. “I think we really need to be realistic. We don’t have a choice.”
“You have to prepare for the worst and hope for the best,” pointed out Councilor Ivan Fletcher. “The people of this town can’t take anymore. It behooves us to do some real soul searching. Life as we know it in Madawaska is going to change.”
Chasse suggested that the group meet quarterly throughout the next several months to keep the lines of communication going as they all wait for information on where to go from here. Therrien encouraged anyone having suggestions on creative budgeting or ways to make cuts should contact her at the town office.