It took months for Washington County officials to begin fixing their long-festering financial crisis, but some of their biggest problems remain unresolved with debate about reforms looming.
The second half of this year was dominated by a public reckoning with years of poor bookkeeping, delayed audits and an influx of cash from the federal government via the American Rescue Plan Act of 2021 that hid the scale of Washington County’s woes.
To keep operating, the county was forced to take on around $8 million in short-term debt. Due to anger over the mismanaged funds, Down East voters rejected a proposal in November that would have allowed the county to refinance its short-term debt.
Entering 2026, county officials are hoping that early tax payments from towns will allow them to pay the debt back to Machias Savings Bank by February. Commissioners have floated the idea of making the treasurer position appointed instead of elected. Washington County’s situation is forcing debates in Augusta and new attention on often-ignored county governments.
“I think we’ve got a good plan moving forward to start to get us out of this hole,” Commissioner Courtney Hammond said. “It’s a long-term plan to put us on a better financial footing.”
The short-term plan remains unclear. Gray said the county will not be able to take out another loan and continue funding services until they pay off the current one. The plan is to eke out enough money from the towns to pay off the loan in full, then immediately take out another to keep the lights on.
So far, 22 of the county’s 43 municipalities have agreed to make early property tax payments that would help officials pay off $4.3 million of the debt. More towns will meet to discuss the subject in the new year. Hammond said that he’s attended roughly 10 meetings at which towns agreed to pay off a portion of the county’s debt.
In exchange for that payment, the county will exempt municipalities from the costs that may be incurred by the county’s failure to repay. That will eventually push the cost onto those who cannot cough up the money this winter, including some of the rural county’s smallest towns.
“Otherwise everybody would be paying for them and it wouldn’t be fair,” Gray said.
Since Washington’s situation is unprecedented in recent Maine history, it’s unclear what will happen if commissioners cannot raise enough money. Even if they can, it will be a tough year for residents and municipal officials in one of Maine’s poorest and most rural counties.
The budget problems will likely drive up the interest rate for any future short-term loan. A recently passed budget will increase the county tax levy by 17 percent. That levy is a small portion of what towns must charge in property taxes, but towns putting together their budgets this summer will have no choice but to pay up, forcing property tax hikes, service cuts, or both.
The crisis has inspired talk of long-term change to county government, some of which may begin taking shape in the new year. Lawmakers in Augusta will debate a bill brought by state Sen. Marianne Moore, R-Calais, that would allow towns and counties to declare bankruptcy. It would provide a path forward for the county if it heads for default.
For now, work to find certainty ahead of the new year is under way at the county seat in Machias.
“It’s a delicate situation, and we’re listening to the auditor, bond counsel, the bank, a treasurer, our municipal consultant, we’re all really trying to look at all angles of this to get us through before so we don’t create any further problems down the road,” Gray said.
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.
