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LUBEC — Following a raucous hourlong meeting Wednesday, the Lubec Board of Selectmen decided to present voters with two options for paying the town’s share of the tax anticipation note debt in Washington County.
The meeting was tense as audience members repeatedly interrupted the board’s discussion, prompting Chairwoman Carol Dennison to bang her gavel on the table at least six times.
Like all municipalities in Washington County, Lubec has been asked to consider prepaying its share of the tax anticipation note, or TAN, in 2025 to help pay $8 million in debt. If the town prepays, it would not have to pay interest on any bond the county might borrow to cover the obligation.
The shortfall stems from years of poor financial management, including underbilling municipalities for taxes over five years. The county drained its reserve account to cover part of the debt and operating expenses in late 2025, but it no longer has enough money to meet expenses, prompting the request for towns to help pay down the debt.
The issue is sensitive across the county and sparked angry accusations in Lubec this week.
Lubec’s share of the $8 million debt is $423,511.95, among the higher per capita costs countywide. If voters choose to cash in one or more certificates of deposit to prepay in 2025, the town would face at least $4,200 in early withdrawal penalties.
But as Selectman Mark Kelley noted, the town has already earned $46,000 in interest on a $500,000 certificate of deposit. Even with an $8,000 withdrawal penalty, if the town uses that CD to prepay its entire debt share this year, it would still come out $38,000 ahead.
Dennison suggested a second option: cashing one smaller certificate of deposit, paying a $4,200 penalty and covering the rest of the prepayment with cash from the town’s reserve accounts. She insisted the county must understand that the payment would go toward 2026 taxes, estimated at $1,050,212.
“You don’t have any accountability if you voluntarily give the county this money without guidance,” she said, warning that the town could face greater costs if the payment is not tied directly to 2026 taxes.
“It’s stupid, what you’re saying,” a member of the audience shouted.
Dennison shot back, “Are you calling us stupid?”
The audience member said he was not calling the board members stupid, only their remarks. Dennison then gaveled for silence.
Selectman Daniel Daley, also a member of the Washington County Budget Advisory Committee, suggested the cleanest option was to cash the larger certificate of deposit, absorb the $8,000 withdrawal penalty and pay the town’s share in a single move that would preserve its reserve account.
Last week, Town Administrator Suzette Francis told Monitor Local that the bank had offered to waive the withdrawal fees last September.
But, just this week, the bank said the certificates of deposit are invested through the Certificate of Deposit Account Registry Service, a service that allows entities to invest in multiple CDs held by many different institutions to leverage Federal Deposit Insurance Corporation protection for the full amount of the investment, and it can not waive withdrawal fees.
FDIC protection for a single CD deposit is capped at $250,000.
On Wednesday, Dennison said she favored cashing out a smaller certificate of deposit and using town funds to cover the rest. Kelley then asked how drawing down the reserve account might affect the town’s day-to-day operations.
Before Dennison could answer, a woman in the audience asked if the town planned a special meeting Dec. 17 to vote on the options.
“What warrant are you guys proposing to put forward?” she asked.
Several board members replied that was what they were still trying to determine.
Earlier in the meeting, Dennison expressed frustration and said the county should have had failsafe checks and balances to prevent the debt from accumulating.
Daley agreed, saying the county’s Budget Advisory Committee had met earlier Wednesday to discuss those issues.
He also noted there had been discussion about whether the county could recover money through bonds held by the former treasurer and commissioners.
“The numbers that have been floated are $50,000 to $100,000 for each” person, Daley said, “which could equate to seven figures, so that helps. Every little bit helps.”
He said the county is considering moving its budget cycle to a calendar year instead of a fiscal year, a change that could eliminate the need for a tax anticipation note each year. Officials are also weighing six‑month budgets and asking towns to pay county taxes in monthly installments to improve cash flow.
Daley said the 2026 budget includes money for an additional auditor to get the county’s books in order. He said the budget crisis has also been referred to the Office of the Maine Attorney General.
The county would have referred the matter to the district attorney’s office covering Hancock and Washington counties, but because Washington County helps fund that office, officials said it would create a conflict of interest.
Daley said the Budget Advisory Committee approved the 2026 operating budget Wednesday with an 18 percent increase instead of the expected 40 percent.
He said he is certain the Washington County Commission will make additional cuts, possibly moving the Regional Communications Center, or RCC, from its Court Street location and selling the building.
As Dennison began outlining options that will go before voters, an audience member interrupted, saying, “There’s a strong possibility that the county’s going to shut down.”
Dennison again gaveled for silence and told the man he was out of order.
“You just can’t talk,” she said, asking several people in the audience to stop talking.
Daley said some departments could close. The RCC, the jail and emergency medical services must remain open, he said, but he suggested the Sheriff’s Office could face a shutdown, possibly including regular patrols.
Dennison again tried to outline voter options: redeeming CDs to pay down the 2025 tax anticipation note debt; cashing out CDs to prepay Lubec’s 2026 taxes, which would include the 2025 debt; or a third option she did not finish before an audience member interrupted.
“It’s not our debt,” the woman said, objecting to any wording that suggested Lubec was responsible.
Another person asked whether the reference to the tax anticipation note would be described as owed by the county rather than the towns. The woman spoke over him, saying, “Taxpayers want some accountability.”
Daley, who did not appear flustered by the exchange, said accountability will come from new commissioners, new Budget Advisory Committee members and a new treasurer appointed since the debt was discovered, as well as from the attorney general’s review of the case.
“We can’t just pay taxes 24/7,” the woman said.
“The silver lining is we’re in a much better position monetarily than a lot of smaller towns,” Daley said, which did not go over well with the audience.
“We won’t be once we spend a million dollars in taxes,” a man shouted, adding that he thought the town should seek legal counsel on wording the questions that will go before voters.
Directing his words at Dennison, he added: “For some reason, everybody on the board seems to think they’re smarter than everyone else. I’m not smarter than you, Mrs. Dennison. You’re so smart.”
Gaveling again, Dennison told the man: “You’re being inappropriate. You’re out of order.”
Kelley assured the audience that whatever wording the board adopts will be reviewed and posted before going to voters.
Selectwoman Joanne Case suggested holding a public hearing on the issue before convening a special town meeting, and the board agreed.
In the end, the board decided to send two options to voters, both of which require redeeming up to $423,511.95 from the CDARS. The first option would use those funds to prepay 2025 taxes and the second to use the funds to prepay 2026 taxes.
A public hearing is set for 5 p.m. Wednesday, Dec. 17, followed immediately by a special town meeting for voters to decide how to pay Lubec’s portion of the county debt.
Before the meeting broke up, someone in the audience asked the board and others in the room to recognize John Rule, who died Thanksgiving Day.
Rule, a reporter with The Quoddy Tides, had been covering Lubec for more than a decade. According to Lora Whelan, assistant publisher of the Tides, Rule loved his adopted town of Lubec and loved writing about it. He recently won first place in an Eastport Arts Center Story Slam.
