BUCKSPORT – The town will join three other towns in a legal challenge to a portion of the Palesky tax cap proposal if voters approve it next month.

Councilors on Thursday authorized the town to become a party to the suit being prepared by the Maine Municipal Bond Bank, which plans to challenge the portion of the cap that pertains to municipal debt.

The Bond Bank provides financing programs and municipal bonds to Maine municipalities, school systems, county governments and utility districts. According to its general counsel, Augusta attorney Jim Mitchell, the Bond Bank holds about $1 billion in Maine municipal debt, including debt from Bucksport.

“Some or all of that debt could be affected by the new law, if enacted,” Mitchell said in an Oct. 12 letter to the town.

The Bond Bank has tapped several towns based on the debt they have issued, including the date they issued the bonds and the method of approval, he said in the letter. At this point, the Bond Bank hopes to include the municipalities of Auburn, Poland and Presque Isle, along with Bucksport.

The tax cap proposal seeks to cap property taxes at 1 percent of their assessed value, plus the taxpayers’ share of municipal debt.

The language of the law raises some questions for Bucksport, according to Town Manager Roger Raymond. As written, the Palesky proposal allows municipalities to repay “voter approved” debt with tax money raised beyond the $10 cap, if the indebtedness was approved by voters in a general election before July 1, 1999.

According to Raymond, Bucksport voters approved the borrowing for the new middle school in February 1999, meeting that time requirement. But, he said, the vote on that project was taken at a special town meeting, and not at a general election. That raises questions as to whether the town could raise the debt service from property taxes.

“That debt was passed by a significant percentage,” Raymond told councilors on Thursday, “We should be able to include it.”

The town borrowed $9 million for the project. The annual debt service payment is about $800,000.

Earlier this week, town officials during a meeting on the bill told residents that the town stands to lose about $3.5 million in property tax revenues, which will drastically affect municipal services.

“The debt service [on the school] is $9 million. If that’s not added on and has to come out of the 10 mills, it’s going to make it worse,” Raymond said.

The Bond Bank will pay 100 percent of the legal costs and will use attorneys Daniel Wathen and James Saffian of Pierce Atwood. According to Mitchell, each town will deal directly with the defense counsel, but the Bond Bank will pay the bill.

There are other questions surrounding the debt portion of the proposed tax cap bill, Raymond said. By joining the suit, the town will participate in the discussions and will have the opportunity to raise those issues.

If voters pass the Palesky proposal, the suit will be filed immediately after the election. If the measure fails in November, there will be no need for the suit.