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Special town meeting on windfall
MEXICO -- Voters will decide how the town will handle a windfall of $704,975.10 from the Maine State Retirement Fund, as well as other money issues, during a special town meeting at 6 p.m. on Tuesday, Sept. 13.
Town Manager John Madigan said the retirement system called several towns that are inactive in the system and Mexico has been inactive since 2004. "We've been members since 1964 and we have very few people who are drawing retirement. But all of those funds have been pulled out into a different fund for those folks, so we have basically no one in the system. What they said was that they were calling the inactive towns to see if they wanted to close out their funds."
"These are funds that would have been the town's contribution back in the sixies, seventies and eighties, and a lot of people who work in municipalities or if they move or go to another town," he said. "They were all able to take theur contribution out of the town's contribution. So we have no obligation on this money. We didn't know exactly what that money was going to be until they actually sold the assets because the state invests all these assets."
Madigan said selectmen and the Budget Committee agreed that the best use of the $705K would be to set it aside to allocate to the debt service over the next five years.
Due to the bad economy, the town took advantage of low interest rates to take out three road reconstruction bonds from the Maine Municipal Bond Bank. These include a five-year $500K bond with $49,000 interest, a 10-year $300K bond with $50,947 interest, and a 15-year $2.1 million bond with $337,000 interest.
At the Aug. 23 board meeting, Madigan suggested in the first article to allocate the nearly $705,000 annually for five years to the debt service, with the first payment being $141,000.
The second article seeks to complement that by allocating $100,000 from the undesignated fund balance to further buy down the tax rate.
The third article would allocate $5,000 also from the undesignated fund balance to restore money for the building demolition fund.
Madigan said that fund was depleted when the town tore down two buildings.
Without the windfall, he estimated that the tax rate would increase by three mills. One mill raises it $128,583.
By using the retirement money to buy down the debt service, he believes the tax rate will instead increase by only 1.5 mills.
The current undesignated fund balance is $535,000, of which he said the town only needs to keep between 10 to 15 percent of its total budget. their total budget.
Madigan said using $100,000 from surplus will keep them in that range.