Washington County is asking municipalities to send their 2026 property taxes early to help cover the approximately $8 million in debt it must pay by the end of the year.
County commissioners voted Wednesday to accept early payments of municipal taxes for 2026 in order to pay off at least some of its short-term loan, which state law requires it to repay by Dec. 31.
By paying early, municipalities may avoid any further interest costs the county might incur if it fails to repay its debt in time, which now appears inevitable. That may also place added burden on towns that are unable to come up with cash by next month.
As towns in Washington County typically raise their taxes at the end of summer, those interested in “pre-paying” to reduce the county’s debt will have to come up with the funds another way. The County’s roughly 40 municipalities now have a few weeks to decide whether to shrink the county’s debt by dipping into their reserves or taking out loans.
Years of poor bookkeeping have drained county coffers, and voters earlier this month rejected officials’ initial plan to solve the budget crisis: a bond of up to $11 million to pay off the debt. The county is likely to default on its loans early next year, putting unknown strain on its budget, which is funded via municipal property taxes.
The county calculated an amount for each town to pay based on property valuations, adding up to the $8 million total. It will only blunt the impact of the impending failure to repay; it’s unlikely that every town will cough up cash to help the county pay its debt in time.
“We have to try to pay as much of [the debt] as we can,” County Manager Renee Gray said. “The rest will be put on… the towns that didn’t pay, plus their 2026 county tax.”
That could build some goodwill with Machias Savings Bank, the county’s creditor, as officials seek ways to limit the impact of its failure to pay by the statutory deadline, and possible default on the loan in February.
Gray said Machias officials are considering taking out a loan, while officials in the town of Addison voted unanimously to dip into a budget surplus to help the county repay.
The repayment scheme could ultimately cost small towns that cannot afford or decide against paying early. It’s likely to push costs onto taxpayers in places like the island town of Beals, which has a population of 450 people. The county estimates that its portion of the current debt amounts to around $185,000.
“We can’t come up with the funds and still run the town,” Select Board chair Glenda Beal said. “For a small community that’s a lot. I don’t know what we’re going to do, but it’s not going to be good either way.”
The impact of declining to pay the county early remains unclear. Gray said that weeks after voters rejected the bond, the commissioners and the county’s budget advisory committee have yet to finalize a plan. That means nobody is certain what financial impacts may hit the county in 2026.
According to Gray, towns interested in paying off their portion of the county’s debt will have until Dec. 24 to do so.
“We need to have some idea, by the end of the year, where we’re going to be,” she said. “We owe that to the bank.”
Daniel O’Connor is a Report for America corps member who covers rural government as part of the partnership between the Bangor Daily News and The Maine Monitor, with additional support from BDN and Monitor readers.
