SKOWHEGAN — Town Manager Christine Almand and two Skowhegan selectmen met with local legislators Wednesday to find ways to lessen the effects of the loss of an estimated $1.2 million in tax dollars under a new assessment agreement announced Tuesday with Sappi Fine Paper Co.

Meetings were scheduled hastily after an announcement Tuesday night that the town had reached a tentative agreement with owners of the Sappi mill on how the mill is to be assessed for taxes.

Company owners agreed in principle to withdraw the company’s tax abatement requests against the town for 2014 and 2015 in exchange for an agreed upon $64 million in reduced value for taxation beginning this coming year. The 2016 valuation tentatively is set at $380 million. The town would lose about $1.2 million in taxes for fiscal year 2016-17, the town’s assessor’s agent Bill Van Tuinen said Tuesday night.

The deal was a compromise to save jobs at the paper mill and to save the town millions in tax abatements.

“This is a fluid situation, and in any fluid negotiation we try to do well by all sides,” Selectman Donald Skillings, the board chairman, said Wednesday morning. “This deal is not done. There are aspects of this deal that still need to be ironed out, and it is not our intention to jeopardize the process.”

Olga Karagiannis, manager of corporate communications at Sappi Fine Paper offices in Boston, said Wednesday that the company could not comment on agreements while still in negotiations.

“We have had communications with the town, but at this point it would be premature for us to comment,” she said in an email.

The municipal budget approved last June at Town Meeting came in at $10.4 million, with a tax rate of $18.30 for every $1,000 in property valuation. Almand said she has worked with department heads and already has chopped $250,000 from that budget, and they are looking at another $166,000 in cuts without a major reduction in services.

It will be up to selectmen and the Budget Committee to determine what the appropriate level of cuts are to be.

Skillings said there were no firm numbers or targets for budget cuts to cite so long before Town Meeting in June.

“It a further tightening of our belts. We’ve been doing that year after year,” Almand said, adding the town does not have access to $1 million in surplus to reduce taxes this year, as it did last year.

This year, she said of the approximately $3 million in surplus, only about $750,000 is available, because the town needs to keep the bond-bank-recommended $2.2 million in surplus on hand.

Almand and Skillings said that of the estimated $1.2 million loss of revenue, 30.8 percent comes from the municipal budget, 54.5 percent from the school budget and the rest, about 14.7 percent, from the county tax.

“I want to be careful to not tell people we’re going to cut this or that, because we don’t know,” Skillings said Wednesday. “To do that is not fair to the process. As residents of Skowhegan, we are all suffering all of that $1.2 million. We pay the school budget, we pay the county budget and we can only control our budget in this building. While we hold only 30 percent of this budget, we are still very much concerned about the other 70 percent.”

Rep. Jeff McCabe, D-Skowhegan, the House majority leader, said in a statement Wednesday that he is looking at several areas to target in light of the pending closure of Madison Paper Co. in May and the loss of taxes in Skowhegan from Sappi.

“This new valuation drop for the Sappi mill, unfortunately, comes as no surprise,” McCabe said. “Balancing the needs of the town and the need to protect jobs at the mill is vital, not just to Skowhegan but to all the surrounding communities. People should be angry with elected officials in Augusta who have failed to support Maine’s mill towns. We were unable even to secure adequate school funding, revenue sharing and emergency funding to protect property taxpayers.”

McCabe is proposing an act to prevent the separation of the hydro assets at Madison Paper for two years, noting that those assets should be attached to the mill property and not sold separately.

He also is promoting a resolve directing the state Department of Economic and Community Development to work with the University of Maine to develop a study looking into the future of the forest products industry and an act to address job loss and “buffer valuation loss” for Maine’s mill towns.

McCabe also seeks to provide funding to Somerset County towns affected by mill closures or loss of mill valuation, along with additional education and revenue sharing money. He also is pushing for a bill that would use the words “sudden and severe” to address needs of Madison and Skowhegan to offset loss of valuation.

Skillings said the Legislature agreed to pump $15 million more into state aid to education, but the original plan was to infuse $23 million for schools.

Almand, Skillings and Selectman Soren Siren said Wednesday morning they hope legislators can find a way to help. They want to start with the state funding formula for education.

“We want to discuss some things potentially trying to bridge the gap in a large valuation decrease so that our school funding formula is more closely related to what our actual values are,” Skilling said. “The goal of these discussions are to mitigate our potential loss in the school funding formula.”

Since 2004, Maine has used the Essential Programs and Services model, or EPS, to determine how much money each school district needs to spend to provide an adequate education. The state then uses property values to determine how much each community should contribute to the EPS amount, and a state subsidy is supposed to cover the rest.

The formula, Skillings said, benefits cities and towns where property values are going up, or appreciating. In towns such as Skowhegan, the property values are declining, Skillings said.

“When there is one entity in a town that loses a large amount of its evaluation, it radically affects the town — Madison and Skowhegan,” he said.

The town is receiving funding based on value that no longer exists, he said, and there should be a way to change that.

Brent Colbry, superintendent of Skowhegan-based School Administrative District 54, said state aid has increased by $ 229,000 for his district over previous estimates earlier this year. The school board has made tentative reductions totaling $230,000, he said.

“We are still in negotiations with teachers and education technicians,” Colbry said. “We should know our health Insurance rates by the end of next week, and our worker’s compensation rates have yet to be set. Overall, it is still too early to know what the end result be. It is way too early to know how the Sappi agreement will affect the school budget.”

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