A bill to adjust state valuations for Skowhegan, Madison and two other towns to reflect lost paper mill values has cleared hurdles in the Maine House of Representatives and Senate, but faces a likely veto by Gov. Paul LePage.

Hanging in the balance are millions of dollars in local property taxes and potentially higher tax rates at a time when the paper industry is struggling and mills could lay off workers.

WHITTEMORE

McCABE

BY THE NUMBERS

Madison Paper

$149,700,000 — value reduction from 2013-2014

40% — the mill’s value as a percentage of town’s tax base prior to decrease

$80,000,000 — modified value of the mill under pending legislation

SAPPI PAPER

$100,000,000 — value reduction from 2013-2014

53% — the mill’s value as a of town’s tax base prior to decrease

$463,630,900 — modified value of the mill under pending legislation

The bill’s primary sponsor, Rep. Jeff McCabe, D-Skowhegan, and co-sponsor Sen. Rod Whittemore, R-Skowhegan, both said Wednesday that the measure would refresh the state’s valuation of the four towns immediately and allow increases to state revenue sharing and general purpose aid for schools.

Following passage by both the House late Tuesday in a 105-42 roll call vote, and then by the Senate without debate, L.D. 281 awaited special appropriations ratification and then would be sent to LePage, who has opposed it.

McCabe said Wednesday that legislators “have some ideas” to help find more state money for the towns should the bill become law.

“They’re looking at sources of money right now,” McCabe said. “There may even be some surplus in education funding, and there might be some into-the-year savings in other areas. They’re trying to find a source of funding that is not earmarked for anything else.”

PAPER INDUSTRY STRUGGLING

Concern about the mill valuations comes as the paper industry struggles with costs and layoffs. Verso Paper Corp. closed its Bucksport mill at the end of last year, idling more than 500 workers. Last year, Sappi Fine Paper North America announced it would trim 5 percent of its workforce nationwide, including an undisclosed number of positions at the paper mill in Skowhegan.

Normally the towns’ valuation, and state revenue sharing, wouldn’t be changed for state purposes for another two years if such a bill was approved. It wouldn’t affect the towns’ general purpose aid for schools for three years.

During these periods, Madison and Skowhegan would not get money from the state that they would otherwise qualify for. Education subsidies are based on the average state valuation over a three-year period, so the effect would be longer for the school districts.

L.D. 281 asks the state to make exceptions to that rule for the communities, which face large reductions in municipal valuations and property tax revenue.

From 2013 to 2014, the value of the Madison Paper Co. was reduced by $149,700,000, representing 65 percent of its taxable value. The value of the S.D. Warren Co., Sappi Fine Paper’s parent, has been reduced by $100,000,000, representing 18 percent of its taxable value.

Before its value was reassessed, Madison Paper Co. represented about 40 percent of the tax base of the town, and the S.D. Warren Co. represented about 53 percent of the tax base of Skowhegan, the bill says.

The bill would modify the 2015 state valuation of Madison Paper Co. at $80,000,000 and value the property of the S.D. Warren Co. at $463,630,900.

The measure also would affect School Administrative District 59, which includes Madison, and School Administrative District 54, which includes Skowhegan, Canaan, Cornville, Mercer, Smithfield and Norridgewock.

SAPPI APPEAL

Complicating matters, Sappi has filed an appeal of the town’s denial of a requested tax abatement, and if the appeal is successful, it could lower the value of the mill further.

S.D. Warren filed a formal property tax abatement application in March, asking that Skowhegan cut the property tax value of the Sappi mill on U.S. Route 201 by more than $137 million, which would have resulted in the loss of $2.3 million in property tax revenue for the town. The board of assessors denied the request in April.

The town has assessed the paper mill for taxation at $463,630,900. The company says the property should be taxed based on a value of $326,343,426.

The abatement request followed months of negotiations between the town and the mill that last September resulted in a $100 million cut in the mill’s tax valuation. Last year, Sappi paid $9.3 million in property taxes. The previous reduction in the mill’s value, from $567 million to $463 million, approved by assessors last year, cut its tax bill to $7.94 million.

LEPAGE SEEN AS OPPOSED

McCabe said LePage has opposed his bill since the beginning. He said that by adding Jay and East Millinocket, which also have lost tax revenue because of paper mills that have lost value, the benefit of passage of L.D. 281 will be greater.

“I hope the governor stands up for rural Maine and signs this bill into law,” McCabe said Wednesday. “In the meantime, the entire Somerset County delegation will be working hard to build support for this common sense measure. It’s about basic fairness. Our communities should not lose out on state funds for our towns and schools just because the state is using outdated figures in its calculations.”

An email sent to the governor’s office seeking comment was not answered Wednesday.

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