Eastport tax rate could be affected by loss in valuation

A $1.17 million loss in property valuation in Eastport this year could have a significant effect on the local tax rate, Eastport City Manager George Finch told the city council at its February 27 meeting. Under his draft budget for fiscal year 2007, the tax rate in Eastport would increase by nearly 2 mills to 36.99, or 5.7%, while the total budget would increase only by $18,674, or less than 0.4%, to $5,035,489.

In discussing his preliminary figures, Finch cautioned that he does not yet know any proposed budget figures for the school department or the county tax or revenue sharing figures. "If the school needs more money, we would be facing traumatic cuts," he stated.
The city's valuation dropped by 2% to $57.5 million this year and the previous year had gone down by $4.5 million or 7.1%. The drop in valuation is caused by losses to the city's industrial base, particularly Heritage Salmon, Gates Formed Fiber and the Guilford Industries mill, Finch noted. If the city's valuation had remained at the 2002 amount of $65.8 million, the mill rate for the proposed budget would actually have decreased 7.6% to 32.34.

Concerning economic development efforts in the city, Finch noted that Tex-Shield, Creative Apparel and Vicus Technologies continue to provide employment at the former Guilford mill, while possible uses for the former A&P are still being analyzed. He stated that no local tax dollars are used in the economic initiatives.

Under the municipal operations part of the budget, he said any cuts in city administration would mean cuts in staff and fewer hours that city hall would be open to the public. The public works department could be cut $50,000 with a reduction in services, but he asked if this is the time to cut back on improvements to the city's infrastructure. As proposed, the police department budget would increase $7,087. A fifth full-time officer was added in 2004 but has now been cut to working on weekends. Finch noted that for the city to provide the same level of service as it presently provides the municipal operations budget would have to increase by $53,219 to $1.13 million, which is what he is proposing.

Council President Earl Small stated, "I can't see making any cuts until we get the numbers from the school." Finch commented, "Too many times, it seems as though my staff is the only one biting the bullet."

The municipal programs budget, including capital and reserve funds, municipal solid waste, hydrant rental, ambulance, county tax and third-party requests, would increase $20,175, or 3.2%, to $657,673. If the school budget remains at the same level for the amount raised by local taxes, at $820,399, the total to be raised locally would increase by $73,320 to $2,126,722.

Noting that 56% of the properties sold in Eastport during the last 18 months were bought by people from out of state, Finch said he didn't know "what the threshold is for pain" in paying taxes. Budget committee member Mary Pottle said that the effect on people who have lived in Eastport and are trying to hold onto their homes are "the ones who are going to suffer."

Finch stated that he was not sure there is any need to review the line items in the municipal budget, until the council decides on a goal for the mill rate and until the amount that the school department will be requesting is known. The council appointed Mary Pottle, Jackie Battista, Gilbert Murphy and Bob Lewis to the budget committee, with the understanding that the committee may have only one or two meetings, held jointly with the council, instead of its regular schedule of meetings to review each department's budget.
Effect of revaluation

As for the effect of the present revaluation of property, Finch said he is guessing that the city's valuation may nearly double, from $57.5 million to $110 million. The mill rate would then drop to 19.3, which is about average for the state. The effect on one's taxes might not be that significant, since a house now valued at $50,000 would see about a $100 increase in taxes.

However, Finch said that for homeowners with the state's homestead exemption reduction the effect would be more significant. The exemption allows one to deduct one's property taxes on $14,000 of valuation. With the revaluation on a $50,000 home, a $490 deduction would become $270, so the total increase in taxes would be the $100 increase plus the $220 loss in the exemption, or $320.

Finch expects that the council will have to decide in May whether to implement the property revaluation this year or wait until next year.

Other action
The council decided to table action until the March 13 meeting on appointing an individual to a position on the port authority board of directors. So far, Robert Lewis and Chase Langmaid have applied for the position.

A meeting with representatives from Quoddy Bay LLC will be rescheduled from the March 13 meeting to Monday, March 27.