Washington County officials sent details of its ongoing budget crisis to prosecutors while attempting to persuade voters to support an $11 million bond issue in November.
Commissioners are simultaneously attempting to communicate the circumstance around years of financial mismanagement, come up with money to fill the budget hole by year’s end and come up with a plan for what will happen if voters reject the bond issue, which would likely force the county to default on its loans in December and run out of cash by February.
Details of past mismanagement of public money were sent to District Attorney Robert Granger, who cited a conflict because of his intersections with county government and forwarded them to Attorney General Aaron Frey and the acting U.S. attorney for the state, commissioners said.
No criminal allegations have been made against county officials. Commissioners hope the resources of the state and federal government may help clarify whether any funds were wrongly used by county employees. It’s not yet clear whether the state or federal government will pursue any investigation, Commissioner David Burns said.
“That’s up to them,” he said. “Our obligation was to make sure that they had any information we had.”
A Frey spokesperson said she could not comment on or confirm any investigation. The office of Maine’s acting U.S. attorney, Craig Wolff, did not immediately comment Thursday morning.
Commissioner Courtney Hammond said at a public hearing on Wednesday that the county is seeking money from its liability insurance policy, which covers wrongdoing by former employees. Officials did not name any specific employees, though they previously said the former treasurer, Jill Holmes, who resigned last month after 26 years on the job, had improperly moved funds.
Years of mismanagement have drained county resources, and now it’s seeking permission to borrow up to $11 million to pay back $8 million in debt that comes due on Dec. 31. Tax-weary residents have pushed officials to present a clear plan B. With a month until a referendum on the bond, they still lack a clear path forward if voters reject the bond issue.
Some aspects of a backup plan are beginning to take shape, however. At the urging of commissioners, Sen. Marianne Moore, R-Calais, submitted a pair of bills that would give the county $8 million to repay debts and allow it to declare bankruptcy. But legislative leaders must deem them an emergency in order to consider them in January.
Even if the bills are heard in January, the county would be cutting it close. Without a bond, officials said they are on track to run out of money at some point in February. If the referendum fails, the county may default on its debt to Machias Savings Bank by the end of the year, which Hammond said is “not an option.”
The county relies on short term loans frequently, as its fiscal year begins in January, but it receives tax revenue via municipal property taxes late in the summer. Loans like the one it is currently struggling to repay have previously been standard practice. Defaulting would leave the county vulnerable to lawsuits from the bank and could make it difficult to get a loan in the future.
Some residents at the meeting expressed confusion as to why the county asked the state for $8 million while asking residents for up to $11 million; commissioners said they had very limited time to get a number on the ballot for November, and that they have since determined the $8 million figure is more pressing.
Burns said he plans to propose at the next commission meeting that fellow commissioners agree not to spend more than $8 million of the $11 million bond issue if passed. That possible reduction and the possibility of investigation by prosecutors could help move the needle in favor of passing the bond referendum next month.
Glenda Beal, the first selectperson in the rural island town of Beals, said prior to the meeting that many in her town were hoping for more information on how funds ran out. After the meeting, she felt the $8 million limitation and the prospect of an investigation were positive developments. She is still unsure whether she supports the bond.
“I’m kind of up in the air with it,” she said.
Daniel O’Connor is a Report for America corps member who covers rural politics as part of the partnership between the Bangor Daily News and The Maine Monitor, with additional support from BDN and Monitor readers.
