County eyeing options after bond rejection

With Washington County voters rejecting the proposed $11 million county bond question by a margin of 53% to 47% in the November 4 election, county officials are struggling to figure out how to pay the current tax anticipation note (TAN), due December 31, without defaulting on it, which would ruin the county's credit rating.

David Burns, chair of the county commissioners, says he was disappointed by the vote but not surprised. "I had no idea how it would come out," he says, noting that he heard from some residents who were opposed and others who said they would reluctantly vote for the bond. He comments, "I appreciate all who voted and accept their decision."

Among the options for the county going forward is taking out a short-term loan to pay off the current TAN, estimated at $8 million, from Machias Savings Bank. While that TAN, which is due December 31, may not actually need to be paid to the bank until February, state law says it needs to be paid off in the year it is taken out. Burns says the commissioners are checking to see if taking out a short-term loan would be legal. The commissioners were also meeting with Machias Savings Bank on November 13 to discuss possible options for paying the TAN.

Burns says the commissioners are "asking experts if there's any way to take care of the TAN before the end of the year." He notes that the county does not want to move funds that are designated for other accounts in the budget, but he says it may be possible "to use some funds to pay off the TAN."

The county has sent out a request to municipalities to pay ahead on next year's taxes, so the funds could be used for paying this year's $8 million TAN. Municipalities could use any surplus or unassigned funds or take out a loan to do so. Burns says some towns, including Machias, are interested in that idea. Machias will be holding a hearing on November 19 at 5 p.m. to consider taking out a $314,000 loan to cover its share of the TAN. A special town meeting then will be held on December 3 at 5 p.m. to vote on the loan.

However, the county is trying to get legal advice on whether having towns pay ahead on taxes would be allowed under state law. The county's auditor has questioned whether the payment of taxes early could be considered an illegal second tax bill. "Counties can't issue supplemental budgets," Burns notes. "It would have to be voluntary by the town."

As another option, Burns says the commissioners are looking at possibly selling some of the county's assets. "We're trying to get property values and see if it makes sense." He notes that it would be too expensive to move the regional communications center (RCC) from the building where it is currently is housed, but if there are buildings that the county could function without, then selling them would not only raise funds but would also save on fuel and maintenance costs. "It's all about tightening our belt," he says.

The budget advisory committee has been looking at possible cuts in the budget, and Burns notes that those could include shorter work weeks, layoffs, overtime reductions and the limiting of any new purchases. "It's the overall budget, not just the big items," he says. Cuts, though, have to be done without sacrificing services, he observes, as he says the county needs to provide law enforcement, the jail, RCC, probate court and registry of deeds.

As an example of efforts to cut costs, Burns notes that Michael Labbe, operations manager for the Maine Department of Public Safety's RCC in Augusta, spoke on November 5 with the budget advisory committee about having municipalities with higher volumes of emergency calls reimburse the county RCC.

Moving the county's fiscal year from beginning in January to a July start date will help with the county's fiscal woes, but Burns observes that change probably cannot happen until 2027, as towns will need time to adjust their budgets. "It has to be initiated well in advance," he notes, adding that the change "seems the responsible thing to do." Currently, the county is not collecting county tax monies from the towns until September, so changing the fiscal year would eliminate the need for the county to obtain a TAN until county tax monies start flowing in. If the county's fiscal year had been changed "years ago, we wouldn't be dealing with this dilemma now."

As for the legislative proposals to assist the county, the Legislative Council at its October 23 meeting voted not to allow Senator Marianne Moore's bill request for one-time state funding of $8 million to cover the TAN. Moore is appealing the decision by the council, which will hear appeals on Thursday, November 20, but she doubts it will be accepted.

The Legislative Council did vote unanimously to permit Senator Moore's bill to allow counties to declare bankruptcy to be introduced in the upcoming legislative session, but Burns says he does not like the idea of declaring bankruptcy. "I would like to understand more what it would do to the county as far as our credit rating," he says.

At its October 23 meeting, the council also voted 6-4 not to allow Rep. Will Tuell's bill request that would require that county budgets be approved in a county-wide referendum. That decision is being appealed.

Committee eyes cuts

The day after the November 4 vote rejecting the bond issue, the budget advisory committee worked on a new draft budget. The original budget proposal called for a 40% hike, or a $3.9 million increase in the budget, with $1.4 million of that amount being for the first bond issue payment, if the measure had passed, according to Brian Schuth, the chair of the committee. Of the remaining $2.5 million increase in the budget, the committee is eyeing about $1 million in cuts from the $13.8 million to be raised in taxation that the budget proposal originally called for. The cuts would include not filling two open patrol positions in the sheriff's office, one at the RCC and one at the jail. Also, if a fleet management service is used for the sheriff's vehicles, about $300,000 could be saved.

However, the committee is currently looking at placing the $8 million to pay the TAN into next year's budget. That would result in the budget more than doubling, going from the $9.8 million from taxation in the current year to $21 million next year, according to Schuth.

In a non-binding, divided vote, the committee agreed to keep the same level of services that are provided by the county. "We don't see what we could reasonably cut to take out a smaller TAN," says Schuth. Any cuts would "decrease the quality of public safety in the county" and would mean letting some employees go. "We will reduce taxes where we can cut," he says. "There's not a lot of discretionary stuff we can cut."

After the budget committee's recommendation is made, the county commissioners are to either accept or reject the county budget within 15 days of the end of the fiscal year, December 31.