Saco, Maine

On January 16, 1979, the voters in Saco, Maine, upset by a 1978 property tax reevaluation that doubled and even trebled assessments, passed a measure that would cap property taxes at $3 million, allowing for an increase of 2 percent a year in the local budget. The previous year’s levies had totaled $3.6 million, and the city of 13,000 went about firing policemen, letting teachers go, and cutting services. On December 31, the city defaulted on $2.1 million of tax anticipation notes (TANs), a rare and at the time notable instance of a general obligation default. The city failed in attempts to renegotiate the loan, and on January 3, 1980, a Superior Court attached the city’s bank account, leaving it without funds for bills and payroll. ...

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