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MACHIAS, Maine — The Select Board has scheduled a public hearing and a special town meeting in the coming weeks to ask voters if the town should pay its full share of Washington County’s proposed $8 million tax anticipation note by the end of the year to avoid what could be a 10-year debt to the county.
Voters across Washington County are set to go to the polls Tuesday to consider approval of an $8 million bond to fund an emergency shortfall in county government funding.
At its last meeting, the Select Board considered another option to reduce the financial impact on Machias’ taxpayers: the town could borrow its share of the bond at a lower interest rate than the county charges, or take the share it will owe from the town’s existing surplus fund.
The public hearing is scheduled for 5 p.m., prior to the regular Select Board meeting on Nov. 19, and the special town meeting is set for 5 p.m., before the Select Board meeting on Dec. 3.
Residents at the special town meeting in December are also expected to consider the town’s proposed solar and wind power ordinances and approval of a long-term hangar lease for the Machias Valley Airport, Town Manager Sarah Craighead-Dedmon said.
Machias’ share of the proposed county note, based on 2025 property valuations, is 3.93%, or an estimated $314,152.41.
If Machias were to pay the full amount to the county this year, the town would be exempt from participating in the payback of the proposed $8 million county bond, plus interest, which could save it as much as $100,000 over the term of the loan.
“We would just be out of the bond,” Ben Edwards, vice chair of the Machias Select Board and the Washington County Budget Advisory Committee, said.
The Washington County commissioners sent a letter Oct. 9 to Machias and the other municipalities in the county to request the early payoff to help the county boost cash flow and help communities save interest costs over 10 years by avoiding the bond.
“The point of the bond is it allows each municipality to look at their own personal financial situation and make a decision that works best for them,” Edwards said.
Edwards said rejecting the bond would lead to greater expenses and “pain” for the county and its residents in the form of increased interest rates, potential inability to obtain loans and possible legal fees if the county were to default on its obligation to Machias Savings Bank and have to face the bank in court.
A tax anticipation note, or TAN, is borrowed each year to fund day-to-day operations in Washington County during the first nine months, since tax bills do not come due for municipalities that operate on a fiscal year rather than a calendar year.
If some municipalities decide to send the county cash by the end of the year to pay off the TAN in advance, it would reduce the amount of the bond the county would ultimately seek.
“If some municipalities pay off their portion early, it would be less than $8 million that they could use,” Edwards said. “The vote is just to retire the TAN.”
Added Machias Select Board Chair Jacob “Jake” Patryn: “Pretty universally, it seems as though voting the bond down is going to negatively impact everyone, which does bring some relation to it. Getting that information out there in some digestible way and helping people understand what that is is very important.”
Washington County is going to voters with its borrowing plan after recognizing a hidden financial crisis that began late last year. A combination of COVID-era American Rescue Plan Act, or ARPA, funds covering cash flow shortages, poor accounting practices and a serious delay in receiving timely financial audits hid the problem for years.
“We all know the county, through a series of accounting errors, has a large deficit,” Edwards said. “What we are facing right now is the county will run out of cash flow to run day-to-day operations in early February. We also have an $8 million tax anticipation note which comes due Dec. 31, of which we have no money to pay.
“In the long scheme of things, this is a bump that we will all get over. It is a very bad bump at a very inopportune time based on everything that is going on, but this is something that the county will get past.”
