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Business and Economy

Mill's Steep Devaluation Leaves Madison Residents With No Good Options

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Jay Field
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MPBN

MADISON, Maine - The adverse business climate facing the paper industry is increasingly putting the finances of Maine's rural mill towns, and the economic fortunes of homeowners, at risk. In towns like Jay, Skowhegan and Madison, local assessors have had to drop the tax valuation of paper mills and raise property tax rates to make up the difference. In Madison last night, local officials held an emergency meeting, where residents voted to allow the town to seek a $2.5 million line of credit to ease the burden of a projected 30 percent tax increase. But instability in the paper business isn't going away and residents in already hard-hit mill towns are worried about the future.

 

The road sides, welcoming you to Madison, note the year the town was incorporated - 1804 - and its motto: "A great place to live, work and play." For residents here, the ability to do all of these things is still dependent, to varying degrees, on the paper mill across the street from where I'm standing. It's an increasingly vulnerable position for Maine's rural towns to be in - as Madison found out just last month.

In August, the value of the Madison Paper Industries mill dropped from $220 million to $80 million. So on Tuesday night, the town asked residents to come to an emergency meeting at the junior high school. The mill makes up 40 percent of the town's tax base, so its devaluation left homeowners facing a roughly 30 percent increase in their property taxes.

"If the town does not take some action, the 2014 mill rate equates to about $550 increase on a $100,000 valued home," said Madison Town Manager Dana Berry. But Berry says town officials have a plan.

"The board's desire is to reduce the impact on taxpayers and attempt to hold the mill rate as flat as possible," he said. "The board has proposed to establish a revolving line of credit of $2.5 million, only to be used as other sources are depleted."
 

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Credit Jay Field / MPBN
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MPBN
The Madison Paper Industries mill in Madison.

Borrowing the money would mean a smaller property tax increase - no more than $250 on a home worth $100,000. Local residents, including many seniors on fixed incomes, listened intently. Ekeing out a living in Maine's small, rural towns has always been tough. But the slow decline of the state's manufacturing sector, coupled with the recent recession, has fostered fear and frustration. And that became clear as residents like Doug Denico began debating the town's proposed fix.

"What has happened to the valuation process, to go from $220 million down to $80 million?" Denico said. "I think we deserve that question because that's really why we're here!"

The drop, Denico complained, just came out of the blue. Yes, Board Assistant William Van Tunien admitted, perhaps Madison's Board of Assessors could have acted sooner. But Van Tunien says assessors are still dealing with forces beyond their control. "The paper industry, in general, has deteriorated," he said. "The demand for paper is expected to continue to go down every year, one year after the other, into the future."

It's a story that goes like this: Foreign competition, high energy costs, digital substitution and other forces have all conspired to make it harder to turn a profit at paper mills throughout the state. But why, some wondered, is the town giving tax breaks to a company in decline, but not looking out for hardworking, longtime residents? Lawrence Goodwin Sr. works in the contruction business, hauling gravel.

"How many people - farmers, contractors - how many of those, because their business was bad and they cried on their shoulders a little bit, how many did they give 'em a tax reduction?" Goodwin said. "I know you're looking at one you haven't given one to for 65 years, and I don't expect to get one out of this outfit."

Despite these, and many other, frustrations, residents still voted to give the town the authority to take out a line of credit, and use $800,000 from Madison's savings account. For most, they were the best they could do with a bunch of bad options.