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Town, mill facing the unknown
RUMFORD -- "We're faced with two unknowns," said Greg Buccina, chairman of the Board of Selectmen. "The unknowns of the Maine revenue sharing ($979,000 to Rumford) and where that will fall, and the concerns of the full operations of NewPage, particularly our Rumford mill."
On March 13, on behalf of the mill, Tony Lyons, public policy director, testified before the Maine Legislature to oppose the Governor's proposal to skip a year of BETR tax reimbursement, which would cost the mill $1 million.
Under BETR, the Business equipment Tax Reimbursement Program, the business pays the local municipality the property tax and the state then reimburses the taxpayer for that portion of the tax paid on eligible business property. Of the $4.4 million the Rumford mill pays in property taxes each year, about $1 million is reimbursed back to the mill under BETR.
The Governor's current budget proposal includes 'skipping' a year of payments to this mill under BETR, basically an immediate $1 million increase in Rumford's costs.
In his testimony to the legislature, Lyons said, "As one of eight NewPage subsidiary mills, we emerged from bankruptcy protection at the end of 2012, immediately facing as operating year with forecast 4 percent declines in demand for coated freesheet paper and an 8 percent decline for coated groundwood paper, the paper that Rumford predominantly manufactures. We are seeing immediate impacts to our pricing as a result of this demand loss.
Facing this type of market, the fundamental choice is to either shut down one or two mills to balance production with demand or to dramatically cut costs to ensure the business operates on a sustainable cost platform. We chose the latter and announced on Feb. 19 the decision to cut non-personnel discretionary operating costs by 5 percent and personnel by about 300 positions across all mills and the corporate offices. Rumford's share was over $2 million is cost elimination and approximately 45 salaried and hourly positions.
At the full BETR level, we pay over $4.4 million in property taxes annually. A 100 percent BETR payment brings that down by about $1 million to $3.4 million. At that reduced level, we still pay $1 million more than what the next highest mill pays in property taxes; the Escanaba Michigan mill pays $2.4 million. The Wisconsin Rapids mill pays about $1.8 million and both the Escanaba mill and the Wisconsin Rapids mills are newer than Rumford; they also will see greater capital investments this year than Rumford.
In Rumford, the math is getting simpler for us. We just cannot afford to absorb a skip of this year's worth of BETR payments, it's that simple. We can't pass it on to our customers; it leaves us only two ways to cover that $1 million; we spend less and we reduce our workforce.
We just did that, again. In 2009, we have testimony to the 10 percent reduction; we eliminated 130 jobs that year. You are making it tough to be a manufacturer in Maine, especially rural Maine, making it tough for out-of-state decision makers to think of Maine as a place to invest.
This proposal will be felt in western Maine; we know about tough decisions. I know you are faced with making them, too. We're hanging in there. Help us by not supporting this proposal."
At Wednesday's meeting, Lyons said, "We put a lot of effort into ensuring that our employees knew where Rumford stood in its cost structure and how it compared with the other mills. We engaged them in assisting us in coming up with ways to operate more efficiently. For us to continue to modernize the Rumford mill, we need to have a cost structure that makes the corporation want to invest in Rumford."
Mill Manager Jerry LeClaire noted that NewPage became a group of 12 paper mills in 2007. "We are now eight paper mills."
Jim Barnett noted, "For the last three years, I've preached to the choir boys that the mill is not going to there forever and I feel that they should be cutting budgets. We have one employee for every five and a half people in our school system. Our school budget is $35 million. It's gotten way out of sight. We have to start cutting."
"There's ways of keeping the same service, but keeping the price of doing business down. It has to start now because when they pull the plug...since I started coming to town meetings, they had every paper machine working in there. They had another division making paper in there. Now they've pulled out of them out; they're in the process, correct me if I'm wrong, of pulling the No. 11 paper machine. What's next -- 15, 12, 10, 9? When those are done, it's done," he said.
Phil Zinck said, "Rumford really needs to look around at like-sized towns, what department heads are getting paid, how many employees...it just seems like Rumford's government is bigger than others at our level. It's hard to go backwards but we have to become right sized. We're not at 11,000 people anymore. The last few years, we've made part-time people fulltime people. I think the town really has to look at this and I think a lot of us are afraid. It's a good time to look at these things, constructively."
Len Greaney said, "If all the selectboard deals with is going to the assessor and work the valuation, we're missing an opportunity because I think all the townspeople, and all the other businesses, will just raise hell if only the mill gets a tax break because we are taxed too much. When I was town manager, when I left, we were 19.6 on the mil rate. Now we're 24.25. It's unacceptable. We've got to find a way to bring that down."
Buccina responded that an abatement or a reevalation can go either way. "It's not a guarantee that their property tax will be lowered. And any citizen and any business has the right to make that request."
Tony DeSalle said,""I am for giving the mill a good hefty taxbreak. The mill is looking for something immediate and I'm willing to give them now to save people's jobs."
Buccina said, "We're not going to give the mill anything. The process will allow the mill to capitalize on a request. However that request comes out is not in this board's hands or the town's hands. It's in through the process. We can do what we can do by taxation by preparing our budgets to reduce their taxes. We cannot give them a tax abatement."
Matt Kaubris, president and CEO of the Oxford Federal Credit Union, began by presenting board members and the town manager with DVDs of an oral history running on the local access station.
"It about what happened to the once-thriving community of Berlin, NH when pulp and paper went out the door. I would ask each of you to take time and review that. I would urge the board to do whatever you can do within your powers to help the mill out through a tax break, whether it's a TIF, reducing your budget, updating your valuations, because this is going be a tsunami effect through the rest of the community. What happens to the mill happens to all of us," he said.
"The voters said something last year, Mr. Sterling. I think the voters are going to say something different this year in light of the new information that we have. Things were all pretty rosy last year. Things are different this year. I know you have a difficult job to do, we've got to know whatever we can to help the mill," said Kaubris.