Mill closure looms large over Canton municipal budget
Revenue losses attributable to Pactiv top $1 million. A Shot Above photo
Administrators for the Town of Canton have presented a conservative fiscal year 2024-25 budget that seeks some sense of sustainability after last year’s closing of the Pactiv Evergreen paper mill, which created a substantial revenue deficit and has now forced the small town to plan for a huge new expense it’s never had to worry about before.
“This budget is based on necessity rather than wants, which allows us to ensure efficient stewardship of town funds,” said Interim Town Manager Lisa Stinnett during a May 23 meeting. “Despite the unknown future, it is still incredibly important to make fiscally responsible investments in our infrastructure, services and amenities while continuing economic development and encouraging smart growth.”
Stinnett’s budget, her first since she was promoted to interim manager during a staffing shuffle meant to free up former manager Nick Scheuer to focus on flood recovery and mill issues, contains no tax increase, utilizes no general fund balance and looks to save money wherever possible.
Penny-pinching alone, however, can’t make up for a $1.3 million decrease in revenue attributable to Pactiv, which basically wiped away more than a decade of economic growth in Canton.
Last year, before the full impact of the mill’s surprise closing set in, the town had estimated it would collect $3.4 million in property taxes. This year, that’s estimated at $2.3 million — an amount comparable to the town’s 2012 budget.
To plug that hole, the town will use $1.3 million from its stash of General Assembly appropriations made in the wake of the closing.
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The town’s water and sewer fund will bear the brunt of the fiscal crunch. Revenues are projected to be up slightly this year to $3.5 million, thanks to soaring interest rates on investments and a projected 150% increase in tap fee collections attributable to new developments, but the expense side of the equation looks far different than ever before.
In the previous budget, the town expected to spend $3.1 million on all aspects of water and sewer service, including wastewater treatment. Next year, a new $4 million line item — in case the town suddenly has to pay market rates for wastewater treatment — pushes projected expenditures to just over $7 million.
Since the mid-1960s, the paper mill’s various owners have abided by an agreement to treat the town’s municipal wastewater at nearly no charge, utilizing its on-site wastewater treatment facility. Integral to that agreement is a provision stating that the mill must continue to treat the town’s wastewater for a period of two years after any shutdown.
Concerns about the town’s wastewater treatment continue. File photo
The clock has been ticking on that two-year grace period, which according to a letter sent to the town by Pactiv will end on March 9, 2025. Last year, legislators procured an eight-figure appropriation for the town to construct its own wastewater treatment plant, but a site hasn’t yet been acquired. Once one is, it’s estimated that it will take from five to seven years for a new town-owned wastewater treatment facility to become operational.
News two weeks ago that a potential deal between Pactiv and St. Louis-based demolition and development company Spirtas Worldwide might result in the transfer of the 185-acre mill site and its wastewater treatment facility before the agreement runs out was greeted with cautious optimism, but ultimately it provides no assurances to the town about the future of wastewater treatment.
“We don't know if we’ll have to operate it, when we’ll have to operate it,” Canton CFO Natalie Walker said. “We do know that if we had to operate it for 12 months, right now you're looking at between $4 and $5 million.”
Alderman Tim Shepard asked Walker what it would take to make wastewater treatment operations self-sufficient.
“I don’t think we could probably do that, I mean, to make it affordable to live here,” Walker said.
Currently, customers inside municipal service limits pay a base monthly water rate of $17.51 and a base monthly sewer rate of $21.51. For each additional 1,000 gallons of water over 3,000, inside customers pay $4.33. For each additional 1,000 gallons of sewer usage, inside customers pay $2.60. Outside customers pay roughly double those rates.
For a small single-person household inside city limits, a $40 monthly bill is about average. To fully absorb the monthly increase in cost, water and sewer bills could almost double.
The town will utilize water and sewer fund balance to brace for the impact — if and when it comes — but Walker said after one year of such an expenditure, the town would be tapped out.
“We can’t run it,” said Mayor Zeb Smathers. “It would bankrupt us.”
That being said, there are some modest proposed increases to water and sewer rates, both for inside and outside customers.
For inside customers, the base rate for water will climb from $17.51 to $18.04, with each additional 1,000 gallons priced at $4.46, as opposed to the current $4.33. The base sewer rate will increase from $21.51 to $22.16. For each additional 1,000 gallons, the rate will go up from $2.16 to $2.23.
For outside customers, the base rate for water will increase from $35.02 to $36.07, with each additional 1,000 gallons at $8.91, up from $8.65. The base sewer rate will also increase, from $43.01 to $44.30. Each additional $1,000 gallons will cost $4.46, up from $4.33.
The Town of Canton Board of Aldermen/women will entertain adoption of the budget at its next regularly scheduled meeting on Thursday, June 13. Per state statute, municipal budgets must be adopted no later than June 30 each year.
