Canton takes steps to cope with $3 million revenue loss

Mar. 23—CANTON — Less than three weeks after Pactiv Evergreen announced plans to close the paper mill in Canton, Canton town staff have developed a plan to slash the town's preliminary budget for the coming fiscal year by $220,000.

The town is looking at an estimated revenue loss of $3 million once the mill has closed shop, said Town Manager Nick Scheuer. That's because the mill pays a huge property tax bill — not only property taxes on land and buildings, but also on equipment and machinery.

The mill pays both town and county property taxes, so the reduction will impact the county budget as well. For Canton, however, the portion of the town budget that comes from the mill's property taxes is much more substantial.

Property taxes from the mill account for more than 30% of Canton's annual budget. While those property taxes won't dry up completely once the mill closes, the value will decline dramatically. The full impact of the reduced property taxes won't come into play immediately.

Scheuer said the town anticipates receiving most of the mill's real and personal property tax revenue for the coming year's budget. But, he said it was prudent to start making cuts where possible.

"There's a lot of revenue reduction in this budget, but we're preparing for the future at this point," Scheuer said.

Last year's budget was slightly more than $12 million, which was higher than normal due to an influx of grant funds. The year before, the budget was almost $9 million.

Back to the drawing board

Since the mill closure, town department heads were asked to take a second look at their needs and come back with a lowered request. Canton Finance Officer Natalie Walker fears the amount may have to be cut even farther before the budget is adopted in June.

"This is hypothetical," Walker said of the revenue estimates. "We don't know for sure what we're losing at this point."

She addressed cost-of-living and merit pay increases for town staff. The town board had hoped to increase town salaries in light of inflation and the extremely trying times the town employees faced in the wake of Tropical Storm Fred — something that was discussed at a budget work session in February.

At this week's meeting, Walker shared the budget impact of the salary increases and provided scalable options for offering lower increases instead.

"We hope to cut at least another $100,000-$250,000, if possible, without affecting any services or personnel," Walker said in an email followup.

Items discussed included following the path of other communities in the state by eliminating the fluoridation program, cutting contract services for things like cleaning, ordering only enough radios for firefighters on duty and giving up parking lot leases.

On the revenue side, staff suggested eliminating family nights at the pool, which haven't been that popular and would save on lifeguard costs and instead opening two areas near the kiddie pool for private pool parties, which are very popular.

Another option would be implementing a sewer rate hike, something Walker said is absolutely necessary before the town requests a loan for a new wastewater treatment facility. The mill treats the town's sewage, which is no longer a viable long-term option.

Reality sinks in

The budget workshop this week was markedly different from the one in February. Last month, board members were upbeat about the town's flood recovery process, moving buildings out of the flood zone and making plans to forge the hometown of the future — rich with recreational opportunities and plans for a regional wastewater facility to accommodate future growth.

At the time, a future without the mill — an industry that has defined the town for more than 115 years and is part of its fabric — wasn't even a thought.

Mayor Zeb Smathers said he had been dreading the budget discussion, one he termed "another level of heartbreak" brought by the mill closure. He spoke of the hopes and dreams board members shared by a month ago and how those compared to the issues being discussed this time.

"We're asking you no more and no less than to figure out a way for us to survive and not sacrifice safety, not sacrifice our souls," he told the department heads at the session. "We're asking you to be innovative, pick and choose projects that matter to most. We trust you all to figure out how to do that."

Alderwoman Gail Mull said the board members are just the figureheads.

"You all are the workers. We have to make sure we have a future, and we wouldn't have one without you all. We will survive this."

Alderman Ralph Hamlett said while the mill will close, Canton will stay open.

"We will find a way," he said. "It may be difficult for a while, make no mistake about it, but we're here."

Alderman Tim Shepard thanked the department leads for making the cuts they were asked to make.

"We will do our best to protect our people," he said. "We will make do with what we have, but we will protect our workers and our people as much as we can to the very end. We may have to do things don't want to do as far as growth, but we'll still be here doing what we're supposed to be doing."