MILFORD – Residents decided Tuesday to use $200,000 in undesignated funds to keep the town’s mill rate at about 20 mills.

“We felt that rather than have the taxes go up we would reduce it,” said Milford Town Council Chairman Francis Richard.

Last year’s tax rate was 18.7 mills.

Town Manager Vance Merritt said the transfer is a bandage the town has used for two years in a row.

“Last year we took $385,000,” he said. “This is just a band-aid, not a cure. At one point we had $1.3 million. We’ve been slowly whittling away at that.”

Without change the tax rate will continue to rise, said Merritt.

“If nothing is done and next year when we can’t take from the surplus, you’ll be looking at a 25 mill rate,” he said.

Less money from the state for the school system, less revenue sharing and the weak economy led to the higher tax rate, said Merritt.

Good news was announced during the meeting. The Canadian company, Daquam, from St. Jude, is taking over the now defunct International Paper mill that closed just over a year ago.

“It’s going to employ 140 people,” said Richard. “They should be starting the first of September; they’re putting the mill together. It will probably be the first of the year before they start hiring people and start producing. It is something that is going to happen and be a good tax base for Milford and a good revenue base for the community.”

Daquam, a lumber company, has agreed to pay $160,000 in taxes each year, Richard said.

“The final paperwork went out this morning,” he said.

About 30 people attended the special town meeting. Residents already approved allocating $215,000 from the fund at town meeting in June. The additional $200,000 means $415,000 of undesignated funds will be used to reduce taxes this year.

“Our auditor is telling us we need between $450,000 and $500,000 in surplus,” said Merritt. “I’d like to keep a little cushion there.”