Representatives of the town governments in Madison and Skowhegan are expected to speak before state officials Wednesday on the need for two proposed pieces of legislation that would address sudden drops in tax value at paper mills in those communities.

A public hearing is scheduled for 10 a.m. at the State House in Augusta. Among those expected to testify are the Madison and Skowhegan town managers and the assistant to the board of assessors in both towns.

“Both Madison and Skowhegan will take serious hits if this legislation does not pass,” said Rep. Jeff McCabe, D-Skowhegan, the sponsor of both bills, in a news release issued earlier this month. “Our communities should not lose out on state funds for our towns and schools just because the state is using outdated figures in its calculations.”

The two bills, L.D. 281 and L.D. 282, would require that the state immediately recognize the local valuation of Madison Paper Industries in Madison and Sappi Fine Paper in Skowhegan and that the state amend the current law governing school subsidies.

“It usually takes two years for any change in our valuation to hit the state model, so what we’re asking is for them to recognize the devaluation of the Madison mill now as opposed to waiting a couple of years,” said Jack Ducharme, vice chairman of the Madison Board of Selectmen. “When the value of the mill is lower, our school subsidy is higher and our county taxes are lower. In a nutshell, that’s really what the legislation is all about. It’s really designed to help spread out that pain of the devaluation.”

Both paper mills recently underwent tax assessments that produced large drops in taxable value. Madison lost more than 20 percent of its tax base when the value of Madison Paper Industries dropped from $229.7 million to $80 million. The valuation of the Sappi Fine Paper mill in Skowhegan lost more than $100 million, which reduced the company’s tax bill by more than $1.3 million.

State tax valuations now trail local valuations by two years, which means that Madison and Skowhegan would continue to lose extra money they could be receiving from the state next year in revenue sharing and education subsidies. The full amount of education subsidies the towns could be receiving from the state would not be realized for at least three years, since education subsidies are based on the average state valuation over a three-year period.

L.D. 281 asks the state to recognize immediately the most recent local valuations in Madison and Skowhegan and to use the local valuation to calculate school subsidies for the 2015-2016 school year in Regional School Units 54 and 59.

A companion bill, L.D. 282, offers broader assistance to communities around the state that experience a large reduction in municipal valuations. It proposes an exception to the formula the state uses to determine school subsidies and municipal revenue sharing after a community’s property valuation declines by 2 percent or more in a year.

Both bills are proposed as emergency legislation, which means they go into effect as soon as they are signed by the governor. After Wednesday’s public hearing before the Legislature’s taxation committee, the committee will decide whether to recommend the bills to the rest of the Legislature.

“This legislation ensures that we are treated fairly in state aid calculations,” McCabe said. “If we don’t change the law, many communities in Somerset County would be affected.”

Rachel Ohm — 612-2368

rohm@centralmaine.com

Twitter: @rachel_ohm