LNG supporters, opponents dispute impact on local taxes

The Perry Improvement Association's projection that the proposed liquefied natural gas (LNG) storage tank project could reduce property taxes in town by approximately 70% is being disputed by members of the group, Perry Citizens for Responsible Growth. The president of the association, though, backs up the claim with figures that he considers conservative estimates for possible additional costs that the town may need to bear if the Quoddy Bay LNG facility is built.

"To analyze the economic impact of heavy industrial development does not lend itself to simple statements," says Ron Rosenfeld, a member of Perry Citizens for Responsible Growth, which is opposing the LNG project. "Ignoring the costs has been a ploy of proponents all along."

He and two other members of the group, John Cook and Gary Guisinger, point to an economic impact study by Yellow Wood Associates for Harpswell, concerning the LNG project proposed for that town, which found that although the town would receive $8 million per year from the LNG company, the town's taxes would continue to increase after the first few years. Studies done during the 1990s for Chester, Conn., as well as other towns in Connecticut, Rhode Island and Massachusetts showed that property taxes for a median-value house were higher in towns with higher tax bases. "Bringing in industry is not a panacea," comments Rosenfeld, who argues that any action on the proposal should be delayed until the economic impact study by Yellow Wood Associates for this area is completed.

The group says that the town would have to shoulder increased costs, including a decrease in state revenue sharing funds and increased county taxes. They also argue that there would be a devaluation of much shorefront property, because of the industrial facility, as there would be less demand by retired people or people seeking the recreational or aesthetic values of shore property. The tax burden on inland properties would then increase.

David Turner, president of the Perry Improvement Association, which supports the LNG proposal, says he decided to examine for himself the claim that there were would be 70% drop in taxes if the LNG storage tanks were placed in the town. "I wanted to know if what I'm supporting is right." About nine months ago he calculated possible tax rates based on changes in valuation and spending increases. At the 2005 valuation of $41 million for the town, the taxes on property valued at $50,000 are $945. The LNG facility is estimated to increase the valuation by approximately $250 million, according to Quoddy Bay LNG. Since the state's valuation of the town last year was actually $52 million, the total valuation would increase to $302 million. Turner then added into the local budget the increased county tax, rising from $92,800 to $462,000, an estimated drop in school subsidy, from $600,00 to $100,000, and a decrease in state revenue sharing, from $52,500 to $18,000. The effect of the increase in valuation and town budget increases would be to decrease the mill rate from 18.8 to 5.7, so for the same $50,000 house, the taxes would be $283, which would be a 70% decrease in the tax rate.

Turner then added in possible increased spending by the town, to cover costs for having the facility in Perry, to see how that would affect the mill rate, and considered a scenario in which the school funding subsidy and revenue sharing amounts were zeroed out. With $200,000 added in to the local budget, the reduction in taxes for a $50,000 house would be 65%, and with $400,000 added the reduction would be 64%.

Rosenfeld and Cook, though, say that Turner's estimates assume taxes would be paid on the full value of Quoddy Bay's assets from the beginning. They argue that the facility would not be assessed in full until after construction was completed in 2010. "We will have to quickly ramp up municipal operations, but not receive any revenue," says Cook, arguing that the town would have to borrow money at first to cover the increased costs.

They maintain that increased town staffing could include: full-time personnel for the fire department; a police department; a rescue service with full-time emergency medical technicians; an emergency response team; personnel to monitor groundwater safety; a department of public works; and additional demands on the assessor and code enforcement officer. There could also be costs for capital improvements, including road improvements and reconstruction, new equipment and sheds for road maintenance, fire department expansion, a facility for police and emergency services and upgrades in the communication systems. Even if only a small portion of the construction workers bring their families, the school would need to increase both its size and its staff.

Turner, though, disputes whether the taxpayers would have to bear some of those additional costs. He doesn't believe a town police force would be necessary, and he points out that the agreement that the Perry Improvement Association reached with Quoddy Bay calls for the company to fund some of the other costs. Along with committing $1 million to fund several projects in the town on an annual basis, the agreement would have Quoddy Bay cover the costs for any improvements to the Old Eastport Road necessary to accommodate increased truck traffic during construction. Security measures required by the state and/or federal permit process would be at the expense of Quoddy Bay. The company would fund 24-hour coverage by fire and ambulance services, if such services are required by the federal permit process. The agreement also calls on the company to work with the selectmen to make quarterly payments in lieu of taxes during the construction period.

But John Cook says that there is no assurance that Quoddy Bay would meet the commitments outlined by the Perry Improvement Association. "It's just a statement from the Perry Improvement Association."

Rosenfeld notes, "A lot of what they say Quoddy Bay will pay for, they would be required to pay for," including road improvements, fire and ambulance coverage for the plant.

The Perry Board of Selectmen was asked to endorse the agreement between the Perry Improvement Association and Quoddy Bay, but declined on the advice of the town's attorney, John Foster. However, two of the selectmen stated that, as citizens, they personally endorse the agreement.