SKOWHEGAN — Residents will be asked at the annual Town Meeting Monday night to spend up to $300,000 this year for appraisal costs for revaluation of the Sappi Fine Paper North America mill on U.S. Route 201, the town’s biggest taxpayer.
The money might not be necessary, however, if continued discussions with the town over the mill’s value for taxation can be settled amicably.
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The bottom line, said Bill VanTuinen, assistant to the Skowhegan Board of Assessors, is that Sappi wants to pay less in taxes. He said closed-door discussions with the company are ongoing. If the two sides don’t reach an agreement, he said, the $300,000 could be used for legal fees and costs to defend against a legal challenge by the company to the town’s valuation of the paper mill.
“They want to have a lower valuation and a lower tax bill,” VanTuinen said. “This is a contingency; this is not something that the town, if it votes affirmatively on this article, is going to spend money on if there is no need to spend money on. But if there is an ongoing disagreement between the town and (the company) … and this is needed, it will be available at the discretion of the Board of Selectmen.”
The money, if approved by voters, would come from the town’s assessing reserve account.
Sappi executives acknowledged they have been in discussion with the town about the property tax valuation of the mill and want a full and fair assessment of the mill based on the current state of the economy and the paper industry.
“One outcome of the revaluation of the Somerset mill could be lower property taxes,” said Mark Hittie, Sappi director of marketing and communication.
Sappi’s Skowhegan real estate and personal property is currently valued at $567 million, according to town records. The company paid $9.3 million in property taxes last year, or about 53 percent of the entire tax commitment for Skowhegan, Town Manager Christine Almand said.
The town manager said the company has not requested a tax abatement, or a refund on taxes previously paid, but wants a reexamination of the tax structure for the future.
“That would be something we have to consider — a potential (revaluation) in the coming year — because of the state of the paper industry,” Almand said.
VanTuinen said the basis for Sappi’s request for reconsideration of the mill’s tax value comes at a time of reduced demand for printed paper. “People are communicating more and more electronically and less and less by the printed page,” he said. “That is having a negative affect on the printed paper industry. It’s a rough time being a paper manufacturer; it’s also a rough time to be a publisher or a newspaper company.”
Sappi announced last month it was cutting 5 percent of its workforce nationwide, including an undisclosed number of positions at the paper mill in Skowhegan. The job cuts come in response to a challenging market environment and further steps to reduce costs, the company said.
FOCUS ON POSITIONS
While the company wouldn’t comment on the specific impact in Skowhegan, the cuts were believed to have focused mainly on vacant positions at the Somerset County plant.
Sappi’s tax appraisal request comes as voters consider a budget that, while increasing town spending by 1.27 percent over current levels, would raise the property tax rate by about 4 percent based against 2013 valuations. Almand stressed that the final tax rate will not be determined until mid-August because of expected changes in this year’s valuations.
The town experienced a $27.5 million, or a 2.5 percent drop, in tax assessments on real estate and personal property last year, she said. The downturn was seen scattered throughout the town, Almand said.
Hettie, at Sappi offices in Boston, said he wants to continue discussions with the town in a cordial manner. He said the paper mill has been a part of the Skowhegan community for 30 years and continues to invest in upgrades to ensure the company’s — and the community’s — prosperity.
“Our intent is to ensure that we pay our fair share of the taxes, based on current legal and accounting best practices,” Hittie said. “At Sappi, we understand the role we play in the community and are committed to maintain a strong partnership with Skowhegan and the town’s residents, many of whom are our own employees.”
Town Meeting is set for 7 p.m. Monday in the Skowhegan Opera House on Water Street. Municipal voting and the election of town officers and school board members is Tuesday. Polls are open in the Municipal Building Tuesday from 7 a.m. to 8 p.m. There are two open seats on the Board of Selectmen and four vacant positions on the school board.
SURPLUS SPENDING
Voters Monday night also will be asked to take $1 million from surplus funds to offset taxes in the coming year. Almand said the town currently has $3.9 million from prior year budget surpluses. Taking $1 million from the account would still leave $2.9 million left for future use.
If all of the money articles in the proposed $9 million budget are approved Monday night, Skowhegan residents can expect to see the tax rate increase from the current rate of $16.40 per $1,000 valuation to $17.07, according to Almand.
In voting on the 49-article town meeting warrant, voters also will be asked to weigh different recommendations for spending for the coming year from the Board of Selectmen and the town Budget Committee on budget items ranging from fire and police protection to the funding for the public library and the Chamber of Commerce. Each amount listed can be approved as presented or reduced with a motion from the floor of the meeting, but spending can not exceed the amount listed on the warrant.
In the Police Department spending line, the Budget Committee is recommends the department’s $1,146,850 request. Selectmen are recommending a reduction to $1,137,798.
The Fire Department is asking for $803,566, which the Budget Committee supports, while selectmen are recommending $801,866.
Almand said the different recommendations from the two boards is common and happens every year.
“They both, as a group, look at the needs, the tax situation and the amount of services to provide the citizens and you’re not always going to get two groups that share an opinion,” Almand said. “We all have put a lot of work into this budget; the department heads did their best to put a fiscally responsible budget together.”
The difference in funding recommendations also is seen in requests by the town’s public service organizations. Each organization had to petition the town in order to get its funding request on the Town Meeting warrant.
The Skowhegan Free Public Library is asking $97,867 from taxes for the coming year. Selectmen and the Budget Committee both are recommending $88,081. Voters could, as they did at last year’s annual meeting, ignore the recommendations and vote to appropriate the entire amount requested by the library.
The Chamber of Commerce is asking for $24,000, while both committees recommend $10,000. The Skowhegan Community Food Cupboard is seeking $10,000 this year, while selectmen and the Budget Committee recommend a $500 appropriation.
Doug Harlow — 612-2367
Twitter: @Doug_Harlow
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