Old Town residents will likely see property taxes increase, but not by the original estimate of 38 percent, and services may fall off.

The city is scrambling to balance the July 2025 to June 2026 fiscal year budget as it deals with a $1.5 million loss of tax revenue following the closure of the ND Paper mill. The state is helping offset the budget deficit, but it will not cover the full gap.

The city filed for an adjustment in the amount of money it receives from the state because of the “sudden and severe” disruption to its tax base. The state gave the city just under $1.8 million, City Manager Bill Mayo said.

In addition to losing money from the mill closure, Old Town will pay nearly $180,000 more, about a 2.88 percent increase for Regional School Unit 34’s budget and its county tax is going up by almost $126,000.

Taxes will likely increase by 12 percent or less, a far cry from the estimated 38 percent increase when the City Council first heard the draft budget in early April, Mayo said.

But 12 full-time and five part-time positions will likely be cut, he said.

Councilors are still deciding which positions may be affected. They had previous preliminary discussions of various cuts, including police officers and firefighters.

The City Council also must decide how much money it will use from the fund balance to help lessen the deficit, Mayo said.

The property tax increase goes down 1 percent for every $100,000 the council pulls from the fund balance.

Typically the city doesn’t spend a lot of the fund balance because it’s essentially the city’s savings, Mayo said.

The councilors will have to make tough decisions in the coming weeks to get the budget finalized before July 1, he said.

“You don’t want to see anybody lose a job so that’s their moral dilemma right now,” Mayo said. “[They’re] trying to figure out how much money to take from the fund balance to offset that.”

Correction: An earlier version of this report incorrectly stated the increase of Old Town’s contribution for the RSU 34 budget.