SKOWHEGAN — Spending in the proposed town budget for the coming year is projected to be down from the current year, but the tax rate probably will increase because of the declining tax valuation of the Sappi paper mill and the resulting reduction in Sappi’s tax payment.

That’s the message going into the Town Meeting on Monday night, when voters will get a look at a proposed spending package of $10,178,589, which is down 4.57 percent from the budget approved at last year’s Town Meeting.

The meeting is set for 7 p.m. in the Skowhegan Opera House, upstairs in the Municipal Building on Water Street.

Voters also will be asked to vote on ordinances on drug dispensary locations, parades and mass gatherings, tax increment financing and regulations for public cemeteries.

The tax rate going into the meeting is $18.30 for every $1,000 in property valuation. If all the articles are passed as written Monday night, the new tax rate could be $19.42 for every $1,000 of valuation, Town Manager Christine Almand said.

“Although the budget is down, we’re projecting an increased mil rate due to the reduced value of the Sappi mill,” Almand said. “The loss of $64 million in valuation is a loss of tax revenue of $1.2 million. Although we’ve lowered the budget, the mil rate is still going to increase due to that loss in revenue.”

Selectmen voted in March to cap the value for taxation at the paper mill at $380 million. It was a compromise solution to save jobs and put an end to disagreements that had dragged on for months, officials said.

In exchange, Sappi agreed to withdraw its tax abatement requests against the town for 2014 and 2015. The compromise represents an agreed upon $64 million in reduced value for taxation beginning in the coming fiscal year. Under the agreement, the town will lose about $1.2 million in taxes for fiscal year 2016-17.

Almand said the tax rate could be reduced if voters approve taking money from existing surplus and from $200,000 set aside last year in a reserve account that had been earmarked for a court battle with Sappi over valuation for taxation. The issue never went to court.

Almand said in Article 42 of the Town Meeting warrant Skowhegan voters will be given three choices about how much they want to take from surplus to offset taxes. There is about $3 million in surplus, she said.

The choices includes Almand’s recommendation of taking $750,000 to reduce the tax rate, which is included in the article. Selectmen recommend in a 3-2 vote to take $350,000, while the Budget Committee in a 7-1 vote recommend taking $250,000 from surplus to offset taxes.

Skowhegan voters approved taking $1 million from surplus last year. Almand said $761,000 is available from surplus under the town’s own fund balance policy.

Almand said expenses are projected to drop in the coming years, as cost savings were realized in electricity, gas, heating oil and diesel; and road sand, salt and cold patch costs are down because of the recent light winter. Debt service is down about $114,000 and requests for capital reserves are down by $263,000.

Spending proposals on the 58-article Town Meeting warrant Monday night will include:

• $1,422,995 for general government, including the town manager’s office, planning, code enforcement, assessing and economic and community development.

• $1,343,400 for the Police Department, which will include the cost of the new Hospital Resource Officer, paid for by Redington-Fairview General Hospital.

• $852,341 for the Fire Department, including a $14,016 increase for a new firefighter, but also a reduction in overtime costs.

• $818,163 for solid waste management.

• $423,502 for summer roads, $559,533 for winter roads and $220,000 for public works vehicle maintenance.

Voters also will be asked to raise money for 11 public service agencies, which request funding annually by petition to the town. Those expenses include $103,952 for the library, $24,000 for the Chamber of Commerce, $40,000 for Main Street Skowhegan, $15,000 for Hospice Volunteers and $10,000 for the community food cupboard.

Residents will be asked to decide whether to adopt ordinances to extend and amend a downtown tax increment financing, or TIF district; to repeal and replace the town’s cemetery ordinance; to replace the previous medical marijuana ordinance with a controlled substances facilities plan; and to repeal and replace the parades and processions ordinance with a parades and mass gathering ordinance.

In the TIF plan, a 10-member oversight committee is recommending that the town renew its downtown TIF designation with the state for another 18 years. The committee has been working with Skowhegan selectmen on where and how to spend TIF money. A TIF district in Maine may be designated for up to 30 years. Skowhegan’s downtown TIF was established in 2006 and expires next March.

In a TIF, the town applies to the state to take the base valuation for property taxes in a designated area — such as the downtown business district — and asks that any improvements in the base valuation and subsequent increased tax values be collected, or “captured,” to be held in reserve for local economic development.

The proposed Controlled Substance Facilities Ordinance would replace an ordinance already regulating future medical marijuana dispensaries, adding methadone clinics to the institutions regulated if approved by voters Tuesday night.

A registered dispensary for marijuana or methadone in Skowhegan could be located only on U.S. Route 201, U.S. Route 2 east of downtown and at the Northgate or Southgate industrial parks. Prohibited zones include 1,000 feet from an existing school or any of the town’s so-called “safe zones,” including ballfields on South Factory Street, East Maple Street and the community center.

Doug Harlow — 612-2367

[email protected]

Twitter:@Doug_Harlow