RUMFORD — The town’s auditor told selectmen April 6 that they need to develop a rainy day fund in case the Catalyst paper mill shuts down.
“Knowing what your tax base is and knowing that your largest taxpayer (the mill) and that there could be some potential valuation issues with that … I will rate you below average,” Ronald H. R. Smith, managing partner of RHS Smith & Co. of Buxton, said.
“So, what’s changed?” Board of Selectmen Chairman Greg Buccina asked. “According to you, we were rock solid (last year).”
“What’s changed is that for five years, you’ve used $1.2 million to artificially keep your mill rate down,” Smith said. “I’m not here to tell you good things warm and fuzzy about the current valuation of that mill. I think that brings you down below that rock-solid level with the uncertainty that you can’t control this road.
“I think that now is the time,” Smith said. “I think there’s more a sense of urgency than there was a year ago to come up with some type of rededication of your internal portfolio.”
Buccina said, “So we have to go to the voters to reallocate our funds.”
“I have to disagree with your analysis on artificially reducing the tax commitment,” Town Manager John Madigan said. “Years ago, when I was here and we built that cogen, and we established all these reserve funds, I asked the auditor then what was the proper amount of money to reserve for cash flow.
“Some will say two months, three months, 10 percent, 15 percent,” Madigan said. “You were talking earlier about $1.2 million. To me, that’s the prudent amount to retain for your cash flow. Everything else is excess and therefore belongs to the taxpayers. That’s how I’ve operated my whole career.”
“The only thing I see that’s changed that we should be concerned with is the volatility of what’s been going on at the mill and the need to rethink, like they did in Bucksport. Let’s set aside a rainy day fund in the event that mill closes just like the Bucksport mill. That’s the one thing that’s changed, but when say ‘arbitrarily reducing the tax commitment,’ that just isn’t so. I’ve always managed and understood the prudency of not retaining more surplus than what’s necessary,” he said.
Smith said, “That $1.2 million is not arbitrary because it stays constant for every year. I know life has changed in Rumford over the last five years. And the reason why your mill rate went up 3 mills last year was because your budget failed four times the prior year before that and you had to get back to that level.”
Buccina said, “I’m really glad to hear what you’re saying because it just indicates to me personally, as a board member, that we need to change how we do business in these times. These times, they are a changin’, and we can either have our trousers up or caught with our trousers down.”
Smith added, “I don’t want you to dwell on gloom and doom when I say you’re below average. Years ago, we made assignments based upon years ago. It’s years later, and I don’t think that we’ve adjusted to what those assignments are. The good news is, we still have money to adjust. I’m just saying that now is the time to do it.”
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