Hermon considers tax cap scenarios

HERMON – Town Manager Clint Deschene said it’s not scare tactics when he talks about costs rising in town and services dropping should the proposed tax cap proposal gain passage this November.

“Just because something is scary doesn’t mean it’s scare tactics,” Deschene said Friday, describing how the town would have to deal with cutting as much as $2.6 million from its budget to meet the requirements of the so called Palesky tax cap proposal.

The tax cap referendum was initiated by a citizen petition and will be on the Nov. 2 state ballot. If it passes, it would cap property taxes at 1 percent of their assessed value.

With some uncertainties about the proposal, including some constitutional challenges, Deschene has projected reductions anywhere from $1.5 million should the assessment rollback be removed from consideration as is being challenged, to the $2.6 million for what Deschene described as the “as written” approach.

Either way, the town will be hurting, it’s just the degree of pain.

Under the “as written” approach, the town of Hermon would have to cut half its staff of 12, including Deschene’s job and those at the head of the police and fire departments.

Police coverage would revert to the Penobscot County Sheriff’s Department to save $133,077. Under the lesser reduction plan, the town would retain its police coverage but to a lesser degree, dropping from 150 hours a week of coverage to 110 hours.

The fire department, as a worst case scenario, would lose $80,091, forcing it to eliminate the chief’s full-time position, restrict repairs and likely reduce the fire insurance rating in town, a prospect that could cost homeowners $90 more a year. The other plan calls for rolling back fire department salaries and repairs will be limited to trucks only.

The town’s ability to attract new businesses to further spread out the tax load would be hampered under the tax cap. Deschene said two businesses added to the rolls last year contributed $30,000 to the town’s tax revenues.

But with economic development and other budgets slashed under the severest of cases, Deschene wondered how the town would be able to maintain some existing businesses let alone attract new ones in.

With passage of the tax cap, residents might first notice the effects when it comes time to put out the trash. There would be no curbside pickup and the transfer station would be closed, leaving residents essentially on their own.

“Take care of your own trash, it’s not our business,” is the message the town will have to give its residents.

Such a move could possibly open the door for franchise waste pickup where a company pays the town for a contract to pick up trash then charges individual customers for the service.

Residents currently pay $35 per year for curbside pickup, but Deschene said that cost could increase to $22 per month or $264 per year.

Road maintenance would be delayed as repairs would be limited to extreme situations only and in the winter, salt and sand usage would be reduced and secondary roads would see less plowing, Deschene said.

Capital reserve accounts, where funds are set aside to soften the blow of the inevitable replacement of facilities and operations would be reduced and likely be used to help offset day-to-day costs.

Reduced maintenance would increasingly take its tolls on roads, buildings and sewer systems. When it came time to replace them, Deschene said the town would have to borrow money, at a higher cost.

Deschene has said he understands the concerns about property taxes, but that he feels there are better ways of going about making improvements.