JAY - Retired International Paper employee Olin McDonald couldn't imagine Tuesday how nearly 150 layoffs at the Otis paper mill would affect workers, their families and the communities of Jay and Livermore Falls.

"It's pretty sad," said his wife, Anita, as she helped him weed around the Jay War Memorial across from the mill. "We have some relatives that work there. We really feel bad. The economy is so bad. They'll need the support of their families.

"I would say half the town did not sleep last night."

Wausau Paper announced Monday that roughly 145 of its 235 employees would lose their jobs when it shuts down one of two paper machines at the mill that straddles the Jay-Livermore Falls town line on Route 4.

The Wisconsin-based company, which acquired the mill in 1997, cited rising energy costs, including oil prices, and the sluggish economy as reasons for permanently idling the No. 10 machine sometime between Oct. 31 and Dec. 31.

All laid-off employees will be given severance packages, Wausau Paper Vice President Gary Rudemiller said Tuesday.

Ashlee Ciarcia of Livermore, manager of a Jay apartment building, said her father was among those who will lose their jobs.

"My father worked there for 25 years," she said. "He's nervous about losing his job. He only has four years, then he's retired."

Shawn Laverdiere of Livermore Falls, stopping at Franchetti's store next to the mill to get a sandwich, said he was saddened by the news of layoffs. "The mill plays a big part in the town."

Livermore Falls Town Manager Martin Puckett said Rudemiller told him the news Monday.

"I was devastated by that. It wasn't a complete shock; I know they have been struggling with increasing energy costs, but it was definitely a surprise," Puckett said.

Jay assessing agent Paul Binette said Livermore Falls taxpayers would bear the brunt of the paper machine shutdown because most of it is in that town. He estimated Jay's valuation would drop by less than $1 million.

Puckett and Jay Town Manager Ruth Marden have asked assessors' agents to look into the impact on the towns' tax bases. Any change in valuation would not take effect until after April 1, 2009.

Both towns approved 20-year tax-increment financing agreements in 1996 to upgrade the Nos. 10 and 11 paper machines. The combined investment by the mill was expected to total $37 million, with about $30 million of it inside the TIF district, where the company agreed to invest money in exchange for tax breaks.

The company said it plans to continue running machine No. 11, which makes masking and painters' tape.

Mill representatives have been in contact with the state's Rapid Response Team to come talk to mill officials, union representatives and workers. The team offers job training and job-seeking skills.

The Jay, Livermore and Livermore Falls Chamber of Commerce and its executive board have contacted state, federal and community leaders about the situation and are trying to find ways to help workers.

"The chamber and executive board are certainly concerned about family, neighbors and communities," Vice Chairman John Ross said.