Old Town weighs new burden of possible G-P tax reduction

OLD TOWN – Georgia-Pacific has paid Old Town $3.3 million in property tax for 2002. The paper company, which last week eliminated its tissue-manufacturing operation at the local mill, made its second tax payment for the year last month.

Now officials wonder whether the city will be able to keep all the money.

“I’m not sure people understand the magnitude of this event,” Old Town Councilor Scott Cates said Tuesday. “If they remove the two tissue machines, which they have already started to [do], they can ask for revenue tax abatement.” The big question, according to City Manager John Lord, is how much G-P will be entitled to, and when it will seek an abatement.

“They eventually will lose valuation, but we don’t know how much. I have no idea,” Lord said.

G-P announced last Friday that it would permanently shut down tissue production at its Old Town mill, cutting 300 of 600 mill jobs. On Monday workers started breaking down two converting lines to move them to a sister company in Plattsburgh, N.Y.

“They have an assessed valuation of $138 million, and that includes the machines in the mill,” said Cates. “They’re reportedly moving $80 to $90 million [worth of equipment]. Translated that means approximately $2 million in taxes.”

Lord said that with the equipment gone, the value of the mill will be reduced and the resulting tax revenues will be less, but he would not speculate on just how much that will be.

“I don’t know when, if, or what” will happen, said Lord. “I don’t know, and that’s the problem we have.”

Officials at G-P said Tuesday they would not hand the city any surprises.

“We’re looking at the issues and options related to abatement, and we have not made any decision,” said G-P controller Rick Douglas. “We will do that in concert with the city. We’re going to be very careful about how this impacts the city because we’re very conscious of how that will impact the city, the taxpayers and the overall community.”

G-P makes up approximately 35 percent of Old Town’s tax base, paying $3.3 million of the city’s $9 million collected tax revenues. The city’s gross budget is $19 million.

“We’ve paid in full for their fiscal year that ends in June,” said Douglas.

Once the 2003 fiscal year begins, property taxes for the area will determine what the area’s mill rate will be.

“The city establishes a budget and the board of assessment establishes a tax rate, and that’s how we fund the fiscal year that starts July 1,” said Lord. “Their [G-P’s] value has not been assessed as of this year.”

The property tax assessor could take until June to finish assessing all the property in Old Town.

“If their property value changes … it would affect us in the upcoming year starting July 1,” Lord said. “We could lose assessed value and it’s a large chunk of the assessed value. The problem is we just don’t know. That’s just like anybody’s property. Many properties [value] will change from year to year.”

In G-P’s case, the company was assessed at $138 million for 2002.

“The city manager and I went down to G-P to discuss where we were going,” said Mayor Alan Reynolds. “It’s going to be a long April and May.”

The issue is even more severe because the city is trying to produce a final budget.

“This is not going to be an easy job,” said Councilor Gary Sirois. “People really need to pay attention. As tough as this budget is, imagine what it will be like with $1 million or $2 million less. If you take $1 million out of our budget it’s going to come from the city and the schools.”

The final budget must be approved by the City Council by June 30.

“I don’t know if we’ll have a decision [to apply for the abatement] by then,” said G-P senior communications manager Robert Burns. All city taxpayers have 180 days after the July 1 commitment date in which to file for abatements through the State Board of Property Tax Review.

Burns added company officials are doing all they can to make transitions smooth and keep communication lines between the city and the company open.

“I would fully expect that they’re going to do that,” Cates said. “We also have to try and decide do we budget for the revenue program and hope that they don’t ask for the abatement or do we budget the $2 million [abatement]. I hope they would try to make a decision and let us know.”