EAST MILLINOCKET – Without the costs of a tax dispute between the town and Great Northern Paper Inc., taxpayers would see a significant decrease in the municipal budget instead of an increase.

Selectmen on Tuesday completed a municipal budget proposal of $3.2 million. Residents will vote on the proposal at the May 21 town meeting.

The single largest budget item is $550,000 for the costs associated with the tax dispute. Without these costs, the total municipal budget proposal would show a 9 percent decrease instead of a 9.5 percent increase and officials would be asking taxpayers for 20.85 percent less than they did last year.

“If it wasn’t for that $550,000, then we would be in pretty good shape,” said John Rouleau, chairman of the Board of Selectmen.

Administrative Assistant Mary Morris said the proposed $550,000 would cover costs already spent by the town for the abatement case, which totals about $459,000, and future costs of the case. She said officials hope this will be the last year the town needs to raise money for the case, which is now being considered by the State Board of Property Tax Review.

The total budget of $3,238,632 represents an increase of $281,209, or 9.5 percent compared with last year.

The amount proposed to be raised from local taxes is $2,502,001. It represents an increase of $35,509, or 1.43 percent compared with last year.

“It’s a responsible budget,” said Morris. “There is no anticipated change in services.”

The administrative assistant said the municipal budget proposal should have only a minimal affect on the current tax rate of $18.69 per $1,000 of assessed property value, but actual figures would not be known until the town’s valuation is completed for the current year.

Morris said the municipal budget proposal includes no new positions and no major capital projects. She said the only capital improvement is the purchase of a copier machine for the office.

The largest single budget decrease is in the capital improvement accounts. Proposed for capital improvements is $6,500 from local taxes, a decrease of $233,350 compared with last year.

Morris said the town is not proposing any new capital projects in the upcoming budget year because it still has many left from this year to complete.

She said many of this year’s capital projects could not be completed earlier this year because of the town’s tight cash flow problems, which were caused by Great Northern making late tax payments. About 82 percent of the town’s tax revenues come from the company. Morris said many of the planned improvements, such as repairs to the Public Safety building, are now beginning.

For better accounting purposes, the town is listing ambulance and Medway police in the budget proposal. Morris said these are not new expenses, but the town is simply showing them in the budget. She said both accounts are not funded from local taxes. The ambulance is self-funded and the neighboring town of Medway pays East Millinocket for police services.

The budget includes funds for 3 percent pay increases for union and nonunion employees

A new budget item is $20,000 to pay for the interest on a tax anticipation note. Officials said for years the town has not had to borrow money in anticipation of receiving tax revenues, but in recent years Great Northern’s payments have been late forcing the town to borrow money to keep operating.