MADISON — Citing a decline in the demand for paper across North America, a representative of the board of assessors said Monday that the value of Madison Paper Industries, the local paper mill, will be decreasing by about $150 million in the upcoming year.
The mill, which was assessed at $229.7 million in 2013 and makes up about 40 percent of the town’s property tax base, will now be valued at $80 million.
“This has been an issue that the board of assessors and I have been reviewing and studying for a while,” said William Van Tuinen, assistant to the board of assessors, during a selectmen’s meeting Monday night. “We’ve had information provided by the taxpayer in answer to many of our questions, discussions of a very frank nature with the management of UPM, and we’ve looked at the overall situation of the paper industry as a whole as well as the situation of UPM within that industry. It’s a very, very substantial reduction in valuation.”
The change in valuation is expected to increase the tax rate from $17.53 per $1,000 of assessed value to about $23.20 per $1,000, according to Van Tuinen, although he said the mill rate and assessment have not been finalized yet.
The change represents about a 30 percent increase in the tax rate and left selectmen with questions about how to raise the money without shifting the entire burden on to homeowners. School, county and town budgets have already been set.
“It’s just terribly frustrating,” said Jack Ducharme, vice chairman of the board of selectmen. “When we came out of town meeting the tax rate we calculated should have netted about $16 per $1,000. After we went through that process, we find out we’re going to lose another $2 million on top of that. It’s just extremely frustrating.”
The drop in assessment has been happening gradually but has not always been reflected in the amount of taxes the mill pays, said Van Tuinen.
“There are a number of factors affecting the paper industry as a whole, especially the printed paper industry, which has become a mature, declining industry,” he said. “There is a decline for paper products in North America and that is a trend that is expected to continue.”
And while paper mills across the state are facing similar problems, Van Tuinen said the challenges have been particularly tough for Madison, a producer of super calendered magazine paper, which in recent years has also faced increasing competition from foreign producers.
VanTuinen, who is also the assessor for the town of Skowhegan, is scheduled to meet with the Skowhegan board of selectmen and the town’s attorney in an executive session Tuesday night.
“In the case of the Skowhegan mill, there has been a substantial amount of discussion between the mill and the town,” he said. “Nothing has been finalized or made public to date.”
In June voters in Skowhegan authorized selectmen to spend up to $300,000 for appraisal costs and legal fees related to a revaluation of the tax assessment for the Sappi Fine Paper North America mill on U.S. Route 201.
Madison officials have the option to ask the school district and county to reconsider their budgets or to go through an appeals process with the state, although the process can take up to two years, said Van Tuinen.
“I’m disappointed to find it out this late in the game, after all the budgets are set and just two or three weeks before tax commitments are set,” said selectman Paul Fortin. “I just can’t believe it’s this type of number.”
Selectmen are planning to hold a public meeting to inform the public on the tax rate, but a date has not yet been set.
Rachel Ohm — 612-2368