By Paul Sylvain

“We’re just staying afloat, and I mean just barely.”

Those words, spoken by Washington County Commissioner Billy Howard at an Aug. 21 public hearing, sum up the current state of the county’s government finances. And the situation could get worse — a lot worse — if a $11 million bond referendum being sought by the county fails in the Nov. 4 election. Among other things, the county will be unable to repay its $7.6 million tax anticipation note that comes due in full on Dec. 31.

Washington County’s Superior Court — where the Aug. 21 meeting was held in anticipation of a large crowd — was indeed packed with municipal officials and citizens seeking answers from the commissioners about what led to the budget shortfall. County Commissioners Courtney Hammond, Chairman David Burns, and Billy Howard called for the public hearing in the hopes of getting feedback and suggestions on how to resolve the crisis. However, they came away light on helpful suggestions but bruised by demands for the heads of those responsible during a lengthy, pointed exchange between Machias attorney Jeffrey Davidson and Burns.

“The understanding that we have right now is that we have approximately a $3 million deficit,” Burns said, to begin the hearing. “That has changed from time to time, anywhere from $3 [million] to $5 million, depending on what the auditor is finding as he goes through the various years’ audits.”

As Burns — reading from an informational fact sheet prepared by the commissioners — explained, in 2019, then-commissioners Chris Gardner, Vinton Cassidy, and John Crowley enacted the “Treatment of Carry-Over Amounts” policy. The policy stated that, beginning with the 2020 budget year, the county treasurer’s office “will treat any carryover amounts from a department’s budget in the following manner: Any entry will be carried over into the next year’s budget in the corresponding line.”

“‘Carryover’ is effectively ‘fund balance,’” said Burns. “It did not take into consideration overspent line items or under collected revenues.” The policy remained in effect for budget years 2020 through 2024. The three former commissioners — Crowley, Cassidy, and Gardner — ended the practice last fall during creation of the 2025 budget, when it was discovered that there was no money left in departmental reserve accounts.

The budget situation worsened, thanks to what Burns said was an “undetected” cash flow shortage caused by $6.1 million in American Rescue Plan Act (ARPA) funds in 2021 and 2022. That money provided cash flow for the county’s use, the chairman said, and was ultimately spent on the design and creation of a new sheriff’s office building across the street from the existing sheriff’s office, which officials hope to reallocate into county office space. 

The fact sheet states, “According to an unaudited projection provided by the county auditor, the county reduced the budgets by use of carryovers and then did the action again mid-year, increasing the deficit …”

The commissioners' plan is to reset the county’s fiscal year from its current Jan. 1 through Dec. 31 to July 1 through June 30, which is what the state and most of the county’s municipalities follow. 

The county’s tax bills to the towns don’t go out much before February or March, currently. A majority of the county’s municipalities, meanwhile, pass their budgets at annual town meetings three months later, in June, just prior to the start of their July 1 fiscal year. This means the town’s tax bills don’t go out until around August or September, eight or nine months after the start of the county’s fiscal year.

The end result is that little to no tax revenue flows into county coffers from the towns until August or September, which forces the county to take out a tax anticipation note (TAN) to cover a roughly eight-month period each year. As County Manager Renee Gray pointed out, it cost the county around $124,000 in interest on last year’s TAN. 

Burns said the 2025 county budget was the first in five years that did not reflect any carryovers. “Also, reserves were cut during the budget process [last year] and funds — such as liability insurance — were not raised [in the 2025 budget] due to the thought that ‘reserves’ existed for those funds,” said Burns, adding somberly, “They didn’t.”

Continuing, the commissioner said, “While the county was experiencing cash flow issues over the years 2021 through 2024, the ARPA fund’s cash was transferred to the general fund to be used for cash flow, until the TAN could be established by February each year.” Burns stated that, while the new Sheriff’s Office building on Court Street was completely paid for by ARPA funds, “The cash for the project came from the 2025 TAN.”

The bottom line, said Burns, is that without an $11 million bond, the county will be unable to pay the 2025 TAN, which currently stands at $7,612,174. He added that the county also has an unaudited back deficit of $2,623,733, in addition to a projected $700,000 cash shortfall for 2025.

“I just want to say these will be extremely trying times,” said Howard. “This is a mess that we had no idea we were getting into.” 

“I came on at the end of May,” said Hammond. “I knew there was a problem, but going through this budget — which we’ve done line-by-line — we found out that it was a lot worse than what we originally thought. All of us just started this year, so all we’re doing is trying to clean up a mess from the last board of commissioners.”

“My question is, who did this?” attorney Davidson asked. After saying audits are required annually, he asked why they hadn’t been done for 2021 and the following years. “Who’s responsible for this?” he asked.

Burns replied, saying the county was behind on several years' worth of audits but had unsuccessfully tried to hire an auditor more promptly. He also noted that many other counties and communities experienced a similar problem, thanks to the pandemic and a shortage of qualified Certified Public Accountants. Additionally, it was pointed out that each year requires two county audits — one for the general county government and a separate one for the county’s unorganized territories.

Davidson argued that Maine law has provisions for the state auditor’s office to provide an auditor when a county cannot find one, and asked, “Why didn’t somebody call the state? Who is it that was responsible for doing that and failed?”

“I guess you have an advantage over me,” said Burns. “I haven’t read that.” Davidson cut Burns off in mid-sentence, saying, “It’s in Title 30A, Section 951. It’s very clear.”

Continuing, Davidson asked, “Who is responsible for not getting the audit done? Is it the county commissioners? The county manager? Was it the treasurer? Who was the person?”

“I’d say it was all of the above, all three,” replied Burns.

Davidson persisted, asking moments later, “What about the treasurer? What’s the matter with the treasurer? Is she still an elected official?”

“The treasurer [Jill Holmes] is still an elected official,” said Burns. “She has taken leave. We made an agreement with the treasurer. She has other obligations she has to take care of. She’s receiving health care benefits and is not being paid. And she will be done on Dec. 31. In the meantime, we have reached out to other people to help us with the budget. We have an assistant treasurer now [Sondra Small] that we didn’t have before. The treasurer has agreed to help us as much as she can, and she’s doing that.”

“The county commissioners have the ability under law to terminate that position [treasurer] for reasons of malfeasance,” said Davidson. “Why is she still working for us, if she was the cause of this?”

“I didn’t say she was the cause of this,” Burns shot back. “I said there was a long list of people who were involved. I don’t know that you can point your finger at any one person. As far as malfeasance, I have no evidence of that.”

“You said there are a lot of people responsible,” continued Davidson. “That seems totally accurate. But it doesn’t seem like anybody is actually going to pay any penalties for being responsible, except taxpayers. Nobody gets fired. Nobody goes away. Taxpayers are going to have a $11 million bond to cover a three-to-five million dollar deficit. Even if nobody did this on purpose, we still have a treasurer the county carries forward. Why is this person still working for us? I don’t get it. Can you explain this to me?”

“I’m not sure I can explain it to your satisfaction,” replied Burns. “[The treasurer] was elected by the people. There is a process if people are unhappy with her … there is a process they can go through. I have no evidence [of malfeasance]. These decisions were made after the [previous] county commissioners set that policy.”

Despite a few terse exchanges between Davidson and Burns, most of the hour-long hearing ran smoothly and civilly. Several people offered suggestions, which included selling some soon-to-be vacated county buildings once the move to the new Sheriff's Office building is complete. 

Another person brought up the disconnect in the county's fiscal year, which the commissioners are committed to changing. But most came to listen and learn about how the county’s finances got drained.

The county commissioners will present a draft 2026 budget package — which Burns has referred to as “the lean option” — to the county’s budget advisory committee on Sept. 11. Still, much depends on whether the bond passes muster with Washington County voters on Nov. 4.

In the event the bond package fails, Burns said that the commissioners are working on a backup plan to keep the county operational through 2026.

A number of officials and citizens spoke up at the county commissioners’ Aug. 21 public hearing on the county’s fiscal mess. Suggestions included selling soon-to-be vacant county property and changing the county’s fiscal year to sync up with the July 1 through June 30 fiscal year used by the state and county municipalities. Others came simply to ask questions about how and when the county’s finances became so dismal. (Paul Sylvain photos)

Officials and citizens from many Washington County municipalities packed the superior court’s trial room Aug. 21 to learn details about the county's fiscal crisis. (Paul Sylvain photo)

Washington County Commissioner Chairman David Burns (left) and attorney Jeffrey Davidson, of Machias, exchange words over Davidson’s criticism of the county’s treasurer, Jill Holmes, during an Aug. 21 public hearing on the county’s fiscal crisis. Burns pushed back against Davidson’s finger-pointing and accusatory questioning about why Holmes has not been removed from her duly elected position. (Paul Sylvain photos)

Washington County Manager Renee Gray responds to a question about a referendum question seeking approval for an $11 million bond that will appear on the Nov. 4 election ballot. (Paul Sylvain photo)