Casco to borrow $1.5 million

By Dawn De Busk

Staff Writer

CASCO — This week, all of Casco’s newly-assigned property values will be tallied. This week, the tax commitment will be set, and those bills will go to the printer.

The recent property revaluation process ran into delays, which means income from tax payments will also be delayed.

Meanwhile, the costs associated with operating the town cannot be put off.

According to Town Manager Dave Morton, the municipality will need to borrow money against its property value, or expected property tax income, so that it can continue to pay its bills.

“We have to do this or we will be shutting down like the federal government,” he said.

TD Bank will loan $1.5 million to the town at a 1.39 percent interest rate, he said.

“We need $1.5 million to carry us for a couple months,” Morton said.

“We don’t have to pay it off until the end of our fiscal year. But, clearly, the sooner we pay it back the less interest we pay,” Morton said.

“We have not done this for years,” he said.

The board voted, 4-0, to borrow the money. Selectman Tracy Kimball was absent during Tuesday night’s meeting.

According to the wording of the motion, the board authorized the town treasurer to borrow the money, not to exceed $1.5 million, in anticipation of tax collection money. This debt would be paid on or before June 30, 2014; and it would be paid back through anticipated taxes.

According to Morton, this bank loan is called Tax Anticipation Note (TAN) borrowing.

“There is a provision in state law that allows the town treasurer to borrow money in anticipation of taxes being paid,” he said.

“In a normal year, we have the Undesignated Fund Balance that carries us between due dates” of local property taxes, he said.

On a monthly basis, the Town of Casco pays $500,000 to the School Administrative District (SAD) 61, Morton said.

And, that is just one bill.

Over the course of a year, the town’s expenses range between $9 and $10 million, he said.

“Right now, we are down to a very low balance. We have about $100,000 in the bank; and that won’t cover our monthly payments to the school district,” he said.

Most likely, a couple of months will pass before tax payments start to come in, he said.

Board members asked whether or not the company doing the property revaluation, Vision Government Solutions, would be held accountable for the town’s financial predicament. The revaluation had been scheduled to be finished this past summer.

According to Morton, town officials and the town’s legal counsel have been reviewing the contract between Vision and Casco, and investigating the ability for the town to be reimbursed.

Selectman Grant Plummer asked, “Are they aware of what is going on right now?”

Morton said, “They are aware of the problems with our cash flow.”

“We are holding back the retainage fee,” he said.

According to Morton, “Often times, when the town issues a contract, rather than have the company post a performance bond, we retain the payment. We retain a portion of the money to ensure that they complete services.”

In this case, the town retained 10%, which is about $17,000, Morton said.

On Wednesday morning, Morton could not answer whether or not the town would seek financial compensation or compensation from inconveniences stemming from the belated revaluation.

“We need to examine the contract and decide what legally to do, and what the selectmen decide to do,” he said.

“The company is top-notch, and they are doing a good job. The issue is: It is taking a lot longer than we were told, and longer than we had planned on,” Morton said.

“The important thing that people should understand is: This does not reflect on the quality of work,” he said.

“It is not a question of the product being satisfactory. The delivery time is just late,” Morton said.

During Tuesday night’s meeting, Selectman Ray Grant said, “I wish you would have checked with other banks at the same time you talked to TD Bank.”

Morton said the timeframe was rather short.

“It snuck up on us quickly. We had hoped taxes would go out in August, then September, and here it is October,” he said.

With the selectmen’s signatures in place, the town treasurer can borrow the money and that sum should be deposited in the bank by Thursday, Morton said.

“The next big hurdle is transferring all the data from Vision to our Trio Accounting system,” he said.

Morton said when citizens receive their tax bills, that mailing will include information from Efficiency Maine about its home energy improvements. Efficiency Maine will pay for the cost of printing the material outlining its program, he said.


Please follow and like us: