OLD TOWN – The Council on Monday informally agreed that the school board must make $315,000 in cuts to compensate for lost tax revenue from the recent closure of the Georgia-Pacific Corp. paper mill.

That’s half of the amount the school previously was charged with cutting from its budget.

Meetings will be held next week to discuss specific cuts by both the city and the school department.

“None of these are easy decisions for any of us sitting here,” Council Chairman Gary Sirois said at Monday’s joint workshop between the school board and council.

G-P announced in March it was closing the Old Town facility, but agreed to work with the state for 60 days to find a new buyer.

That deadline passed last week without a sale being completed, but state and G-P officials say negotiations still are under way with a group of Maine investors interested in purchasing the site.

The mill closure means the city is losing $70 million in tax valuation, and both the school and city are facing significant budget cuts in an attempt to reduce the impact on taxpayers.

The council previously voted to set the tax rate at $25 per $1,000 of property valuation, and share the necessary budget reduction of $1.3 million evenly between the school and city.

“The school side of this is compounded by a significant loss of [tuition] revenue for this fiscal year, and an anticipated loss of revenue for next fiscal year,” Superintendent David Walker said Monday at the joint workshop of the two boards.

At the recommendation of the city manager and finance director, the council appeared agreeable Monday to using $100,000 that’s been earmarked for new school bond debt to ease the current burden and apply the funds to existing debt.

In addition, the council is expected to authorize the city to fund $215,000 in roof repairs at Leonard Middle School until this fall when the school can obtain bond funding for the project. At that time, the city would recoup its money.

Both items are scheduled to be taken up at a future council meeting, but the school now is looking at making $315,000 in cuts instead of $630,000.

School Board member Lianne Judd requested that some of the city’s reserve funds for capital equipment replacement purchases be used to make up for some of the revenue loss.

“I consider our teachers to be sort of our heavy equipment,” Judd said. “They’re not trucks or [police] cruisers, but they’re on the front lines with our kids.”

There also was mention of using funds provided to the city as part of the host community benefits package by the Juniper Ridge Landfill operator to offset the impact of having the facility located in the city to make up for the lost tax revenue from the mill shutdown.

Daigle explained that these funds are earmarked for certain expenditures, such as efforts to diversify the city’s economy and to pay for consultants when it comes time for the landfill to apply for expansion permits.

The reductions facing both boards may not be the end of it.

The city is preparing for G-P to request a tax abatement, which could mean an additional loss of $700,000 to $900,000.

“I don’t really know what’s going to happen,” Daigle said. “We’re hoping for the best but anticipating some of the worst situations coming down the road.”

The council is scheduled to meet next Tuesday, May 30 at 7 p.m. at the Old Town Public Library for a second reading of the budget, followed by comments from the public. The School Board then will meet at 7 p.m. Wednesday, May 31.

The two groups will then hold another joint workshop Thursday, June 1, at a location to be announced. That meeting also is scheduled to allow time for public comments.

The final reading of the budget is scheduled for Monday, June 5.