EAST MILLINOCKET – When residents receive their new tax bills next week, they will see one of the largest increases in the tax rate in the past 15 years.

The higher tax rate does not resolve the pending tax disputes between the town and its largest taxpayer, Great Northern Paper Inc.

Town officials say the major reason for the tax rate increase is that Great Northern’s value has dropped significantly, by about $32 million.

But a company official said the new value the town placed on its paper mill property and equipment was still too high, and will prompt GNP to move ahead with pending tax disputes and the likely filing of a fourth tax abatement request.

Selectmen, who also act as the town’s assessors, this week set the new tax rate at $23.49 per $1,000 of assessed property value. It represents an increase of $4.80 or 25.6 percent compared with last year’s rate of $18.69.

The new tax rate is the highest since 1987 when it was $27.90. Residents with a home valued at $60,000 will see their bill rise by $288, from $1,121.40 to $1,409.40. The first half of the tax bill is due by Dec. 13 and the second half is due by Feb. 6, 2003. Interest of 8.75 percent per annum will be charged after those dates.

The new value of the town is $218,365,870, a decrease of $32,356,706 compared with last year’s value of $250,722,576. The primary reasons for the decrease was a drop in GNP’s value and because the town raised $468,298 more from local taxes.

Earlier, the state Board of Property Tax Review granted GNP a tax abatement of $33.37 million, setting $170.75 million as the 1999 value. The town had assessed the company at $204.12 million. The abatement translates into a refund of $557,329 plus interest of 8 percent per year.

Meanwhile, two other tax disputes between the town and the company are pending for 2000 and 2001, for which the company is seeking refunds totaling $3.14 million

Great Northern’s new value is $146,120,200, a decrease of $59,654,000 compared with last year. Officials said the overall drop was about $33 million because last year’s value included $26 million for the hydroelectric system on the West Branch of the Penobscot River, which the company sold last year to Great Lakes Hydro America.

“We had to absorb this $32 million loss in one tax year when in effect it really goes back to the 1999 [tax] abatement,” said Selectman Dave Nicholson. “We have already committed our budget for this year so we have no choice but to take this. Once again, Great Northern has shown they have no regard for being a good corporate citizen.”

Great Northern disagrees with the new value of its East Millinocket paper mill. Brian Stetson, GNP’s manager of governmental affairs, said the new value was incorrect because assessors used the 1999 value without making adjustments reflecting changes for the last two years.

“What this decision [of assessors] means is the potential future liability of at least $5 million to $6 million to the taxpayers of the town for the legal costs of three more proceedings and the repayment of taxes,” he said. Stetson said the town has spent more than $1 million to fight and lose the 1999 tax case.

He said the company expects a written decision from the state board in December, which will require the town to pay about $650,000 in the form a tax refund. “Great Northern will move ahead and ask the board to proceed with the 2000 case, and we will likely file an abatement request for 2002,” he said.

Stetson said the company felt compelled to disclose publicly what it had offered to the town to settle the remaining two tax disputes for 2000 and 2001 because of the statements made by Nicholson this week.

He said the company offered to drop the two pending tax abatement cases and would waive the interest on the 1999 tax refund, which he estimated at $90,000, if the town agreed to use the state board’s value as the base in establishing future value of the mill.

Stetson said the value of the paper mill should be between $133 million and $135 million, but Nicholson disagreed, saying GNP has been unwilling to negotiate in good faith.

Administrative Assistant Mary Morris said the new tax rate and current budgets do not include any money to pay Great Northern’s 1999 tax refund.

During its meeting this week, selectmen indicated they would be taking a hard look at the coming budgets. Morris said selectmen plan to hold a joint meeting with school officials in the future to discuss finances. Also, she said selectmen want to meet with Sen.-elect Stephen Stanley to talk about the town and state valuations and what effect the abatement cases may have on them.