June 06, 2020
BANGOR DAILY NEWS (BANGOR, MAINE

Newport taxpayers come through with cash to pay note

NEWPORT — Just when Selectman Richard Stone said, “I guess we’ll have to break all the piggy banks,” Newport taxpayers came through with cash this week. Newporters waited until the eleventh hour to pay their taxes, barely allowing the town to pay back a note at Maine National Bank that was on the edge of defaulting.

According to Town Manager Carlo Pilgrim, $844,654 was paid on Thursday to Maine National Bank for the total 1990 Tax Anticipation Note (TAN) debt. Just days earlier, Newport funds were at such a low level that officials thought they would default on the note, which was due Dec. 31.

In 1989, Newport did technically default on its TAN. In the absence of a surplus, TANs are borrowed early in the tax year to run the community until tax money begins arriving. In Newport’s case, the tax due date is so late in the year that officials were actually collecting the taxes in 1989 on the same date the money was due. “We actually had the money on Dec. 31,” said Pilgrim, “but the bank would not process the paperwork, cash the checks, until early January.”

Such a delay prompted a vigorous campaign by the selectmen last year to back up the date that Newport taxes are due. After heavy lobbying with the budget committee, they were moderately successful, setting the new date at Dec. 21.

But the town’s independent bond counselor, Michael Trainor, said recently that this date is still far too late in the year to allow Newport to pay its bills on time. In fact, even though Newport paid its 1990 TAN on Thursday, it is holding back thousands of dollars in bill payments, according to sources.

Trainor held a telephone conference with Newport officials last week, advising them that the first thing the town must do to get its finances back on track is to change the tax due date. “The first thing you must do is change the collection date,” he said. “Also, be sure there is a sufficient cash flow to run the town. The second thing to do,” said Trainor, “is to raise taxes so that the people who do pay will be able to pay enough taxes to run the town.”

“Ultimately, you will need to create a surplus,” he advised. Town residents voted two years ago to take most of the surplus account and use the money to lower appropriations, despite the selectmen’s advice against such a move. “The town itself has created this problem by the late collection date,” he said. “The problem is that the date is so late in the year that your revenues cannot meet your borrowing.”

Trainor said that he was surprised that area banks were continuing to lend Newport sufficient TAN money, taking the late date into consideration. “The banks won’t be able to, or will refuse, to continue to loan under these conditions,” he said.

Trainor’s advice to change the collection date will be a priority, said Pilgrim. An article in the March 1991 town meeting will ask that the date be changed to Sept. 1.

Other area communities have a variety of tax collection dates. Most town clerks asked about their due dates emphasized that tax bills are due and payable upon receipt, but that many taxpayers wait until interest begins accruing. In Hartland, the tax date is Sept. 1, but many taxpayers wait until Dec. 31 because tax bills unpaid on that date are published in the annual town report.

In Detroit, tax bills are due when postmarked, which this year was July 18. Interest begins accruing one month from that date. In Pittsfield, bills are due in mid-October.

Trainor ended his conference with advising the board to “get your budgetary house in order. Don’t play Russian roulette with your collection date.”


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