Media Archive

Milo's finances drained

Article from The Piscataquis Observer, Vol. 165, No. 26, June 25, 2003

By Jessica Lee
Staff Writer

Town looks at options to pay overdue school bill

MILO The town of Mile's checkbook is nearly drained, and the town is unable to pay its school bill.

The board of selectmen last week authorized the additional borrowing of $150,000 to make two monthly payments owed to SAD 41 before the close of the school district's fiscal year June 30.

That vote was taken, however, only if that amount could be added to the town's tax anticipation note. The town currently has borrowed $475,000 in tax anticipation funds.

Town Manager Jane Jones confirmed from bank officials later that such action is not permissible. The board will need to revisit the matter at its next meeting, July 15, she said.

According to Jones, the town's cash flow is depleted,' due to more than $600,000 in outstanding taxes that have built up over the previous three years. The bankrupt Bangor & Aroostook Railroad owes 200,000 of that total in outstanding taxes, and approximately $100,000 in taxes owed through a tax increment finance agreement.

Each year since 1999, Jones said, the town has had to dip into its fund balance to pay off bills, such as the school assessment, maintenance and other budget items, making up for the outstanding taxes. That created a "hole in our cash flow," she said.

Jones said the town now has a cash balance of about $60,000 and another $115,000 left in TAN funding. While one school payment of $75,000 will come out of that money, she said, the remainder cannot be used to pay the schools, because the town requires $15,000 a week to operate. There are also substantial payments owed in the next few weeks, Jones said, including a quarterly payment to the water district and the $50,000 bill for property and casualty insurance.

If drained, the town would have to close its doors.

"This is not meant to be doomsday," Jones said, but she said it does need to be addressed.

Selectmen will consider two options at the next meeting, she said.

One option would be to go to voters at a special town meeting to get authorization to borrow another $150,000 in TAN funds, which could be paid back over a two-to-three year time span. Jones said this is a good option, given the fact that the $200,000 settlement from the B&A is anticipated.

The second option is to go to voters to raise an additional $150,000 in taxes. That would equate to an approximate $3 increase to the 2003 tax rate, yet to be decided. The 2002 tax rate was $24.85 per $1,000 valuation.

Jones said she could not support additional short-term borrowing, which would require the note be paid by Dec. 31, 2003, and may put the town's credit rating in jeopardy. She said the only way the town could guarantee it would repay such a loan this year is if the B&A bankruptcy money became available.

While there's a "good chance" that money will become available by the end of the year, Jones said there are uncertainties surrounding that court process. First, the bankruptcy judge needs to approve the settlement, and then creditors are given a chance to object.

If the town borrows more tax anticipated funds, Jones said, that money could be made available within a month.

The school district has a 90-day window to accept funds to be included in the books for the month of June, and to close the books for the 2002-03 fiscal year, according to Darlene Ricker, administrative assistant to SAD 41 Superintendent, David Walker.

Jones said that the next few months will be critical. The town is only allowed to finalize its tax commitment in July, she said. Taxes typically start coming into the town office in September and October. There is another spike in collections in November, she added, when foreclosure notices on outstanding property taxes are sent out.

NOTE - This article reflects the views of the author and not necessarily those of the TRC Alliance Team.