March 28, 2024
BANGOR DAILY NEWS (BANGOR, MAINE

Bank denies town of Harrington’s loan request

HARRINGTON — Times are tough when a bank turns down a town’s application for a tax-anticipation loan.

Harrington’s loan application, which asked Union Trust Co. for a $50,000 tax-anticipation note, was turned down by the bank Friday. The decision was made after loan officers reviewed the town’s financial books and concluded that the bank’s risk would be too great.

Town officials responded to the loan refusal by turning to other banks, where they hope to convince banking officials on Monday that Harrington’s financial health is not yet critical enough for local lending institutions to toss in the towel.

“The town is almost 200 years old, and we’ve been doing business with Union Trust in Cherryfield since that branch was put in there, but the town has to learn that you can’t play games with money,” said Leah Parker, the town’s first selectman. “For the last five years, I’ve been telling the people not to touch the surplus.”

According to Ralph Dare, the town’s treasurer and tax collector, town officials met with UTC’s loan officers Thursday at Harrington Town Office to negotiate a loan agreement. “One of the loan officers called back today (Friday) and said they wouldn’t let us have the money,” the treasurer explained. “I guess they saw some discrepancies in the town report.”

The most critical blow, thus far, against the town’s credit rating, Dare said, was the near absence of a surplus account.

Townspeople removed about $55,000 from the surplus account last year as a band-aid approach to hold down the local tax burden. “Most of the surplus is now gone,” he said.

Although about 85 percent of the 1991 tax commitment has already been been paid to the town, the core of the cash-flow problem rests with the balance still to come from taxpayers who are late with their payments.

“Times are really hard for everyone,” Parker said. “I feel really bad for the town. It is hard to sleep. I’ve shed tears about it, but I’ve know for many years that it was going to catch up to us, because we have too much uncollected tax money out there. I do hope the people who owe taxes will come in with $10 or $20 or whatever they can come up with. It will all help.”

Of Harrington’s 893 residents, 372 people (42 percent) have poverty-level incomes, according to the Washington-Hancock Community Agency’s 1991 annual report. In that year, the W-HCA received a per-capita contribution of $1.71 from the town, but the agency invested $219.30 on behalf of each of the 372 low-income people. In all, the agency invested $81,540.48 in services provided to the municipality.

Parker said all outstanding taxes from 1989 were recently cleared, but too many of the tax bills issued in 1990 and 1991 remained unpaid. Lawmakers in Augusta are doing neither the towns nor the taxpayers any favors by enacting laws that allow people to coast “for too many years” without having to be held responsible for their debts, she said.

The state’s ever-rising valuation of Harrington and other coastal towns has hurt families in those coastal towns, where the local economy has remained depressed for decades. Since 1989, the state’s valuation of the county’s 46 towns and municipalities has risen 51 percent, from $912,450,000 for 1989 to a proposed $1,379,850,000 for 1992.

Harrington’s valuation in 1889 was $14.9 million and the town’s county tax assessment alone was $27,281.

In 1990, the state valuation of Harrington climbed to $18,750,000. In 1991, it grew to a full $19 million. And in 1992, the town is looking at $24.9 million.

“I can’t say we’ve overspent,” said Parker. “Some of the departmental budgets have surpluses. But, a lot of taxes are still out.”

She and other town officials are expected to meet with representatives of Machias Savings Bank on Monday in a second attempt to obtain money that would be used to keep the town operational until more of the unpaid taxes are deposited in the Harrington’s treasury.


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