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Kennebec Journal & Morning Sentinel 05/17/2009

HARTLAND -- The town government has recently considered filing for bankruptcy if it's unable to restructure its debt and pay its bills, selectmen disclosed at the annual town meeting Saturday morning.

In addition, Town Manager Larry Post and selectmen said they are scheduled to meet Monday with Gov. John Baldacci and state Rep. Dean Cray to seek help with the town's financial crisis.

The town government is still attempting to restructure payments for some $864,000 in debt and is trying to borrow another $650,000 over a 10-year period to account for municipal budget errors during the last several years.

Post said one bank has agreed to loan the town the additional money, but is requiring a "state guarantee" because of the town's financial woes.

Compounding the town's financial problems is additional debt the town absorbed following the 2005 bankruptcy of Prime Tanning Company.

"We have a $2 million problem that came to us as a result of the tannery," said Third Selectman Chris Littlefield, though he said he wasn't being "negative" about the tannery, which is town's largest employer. "It's a serious amount of money. This is all the debt we took on as a result of the bankruptcy. I feel it's unfair. Hopefully, we can get some concessions from the governor."

The meeting with Gov. Baldacci is also needed to obtain the "state guarantee," as requested by the bank, Post said.

If the town's debt payments cannot be restructured, Post said requiring large property tax increases would be a last resort. But Post said he's still optimistic the town can get on better financial footing.

"We're going to come out of this stronger as a community," Post said.

Selectmen and the town's auditors recently discussed the possibility of the town declaring bankruptcy, Littlefield said, adding that they didn't know whether that would be legal.

"We are just getting by, folks. We got some real tough decisions to make," Littlefield said. "We can pass this budget today, but it's incomplete. It doesn't take into account the entire debt service we owe."

There was some good news for residents at town meeting. Selectmen said the town's school assessment had been estimated at $1 million in the budget, but new estimates peg that expenses closer to $805,000. The result, Post said, is that residents will likely not see any change in their tax bills by approving the municipal budget.

Moderator Vaughn Stedman asked residents at the start of the meeting to be "forward-looking."

"We're looking at the future of the town and keeping us moving forward as a community," Stedman said.

A little more than 100 residents attended Saturday's three-hour meeting, opting in the end to side often with the town's budget committee, which recommended a little less spending than did selectmen.

Residents ultimately approved $1.4 million in municipal spending.

"Generally, everyone is trying to cut small corners," said meeting attendee Jay McDougal. "We understand that the majority of things have to be paid for."

In other town meeting business, residents approved an article to change the term lengths of its three selectmen. Instead of being all one-year terms, there will be one-year, two-year and three-year terms, starting with the 2010 election.

The only meeting article to fail was a proposed ordinance for "warrant signing and disbursement of funds," which would have given selectmen more flexibility on when they sign off on payroll and other expenses. That proposal was defeated by a ballot vote, 54-47.

Scott Monroe -- 861-9253

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