Hartland loses bid for loan to pay SAD 48 U.S. financial crisis, tannery bankruptcy among factors

HARTLAND – Hartland officials were not successful last week in their bid to obtain $400,000 in loans, money they planned to use to pay off SAD 48, which is suing the community for lack of payment of school taxes.

First Selectman Harry Gould said Friday that the loan bid failed partly because of the overall financial crisis across the country.

But now that Congress has passed the $700 million “bailout bill” to relieve some of the financial industry’s crisis, Gould said the town would try again.

“We don’t know what else to do,” he said. Meanwhile, officials are trying to make payment arrangements with SAD 48 to pay back the $402,000 that the town is in arrears.

In a second blow, Hartland was told by the Maine Municipal Association that a supplemental tax bill couldn’t be applied. “It would have had to be a gross miscalculation,” Gould said. Town officials have blamed the crisis on the town’s failure to assess high enough taxes to cover expenses. Gould said the supplemental bill was an unpopular idea to begin with.

Despite the money owed to SAD 48, the town’s cash flow is quite strong, Gould said. He said the loans would have been for $200,000 each. One was a short-term loan to be paid back after the first of the year and the second was for two years. He said the town would not have had any problems paying them back.

The board will meet tonight, Gould said, to talk about other cost-cutting measures. He said no more town jobs are on the line – three town employees already have been laid off – but that some decisions need to be made about winter road care. “I don’t know if we have enough people,” he said.

Selectmen will continue discussions about selling off the current town hall, a former school, wood and equipment.

In a frank question-and-answer session with residents two weeks ago, Gould explained that Town Manager Peggy Morgan was not guilty of any wrongdoing or mismanagement. Morgan is on medical leave from the job she has filled for 32 years. If anything, he said, Morgan was too compassionate. Gould said that Morgan did not want to raise taxes too high and may have misjudged the town’s financial needs.

“We have the money for everything else, just not for the school,” he said. “If we were current with the school right now, we would not have to borrow any money.”

Town officials cited a number of factors, including financial hits that the town absorbed when the local tannery, the town’s only industry, declared bankruptcy.

Irving Tanning, the previous owners of the tannery, declared bankruptcy twice, and the first bankruptcy cost Hartland $380,000, Gould said. “In the second bankruptcy, we had to abate $90,000 a year in taxes when normal abatements run a couple of hundred bucks. We did this for three years and that’s nearly $300,000,” he said.

In addition, during the second bankruptcy, the town had to come up with an additional $100,000 to help pay for a booster station for the treatment plan. The original agreement was for the tannery to pay 94 percent of the cost and the town to pay 6 percent. Also because of the bankruptcy, the town is not allowed to reassess the tannery’s property until 2010.

Today’s meeting on the financial crisis will be held at 4 p.m.

bdnpittsfield@verizon.net

487-3187