What happens if Washington County runs out of money?

Washington County officials are floating a 40% budget increase and asking voters to approve an $11 million bond issue to fill a hole left by years of budget mismanagement, but nobody has clear answers about what will happen if the public says no.

Years of poor bookkeeping and limited auditing have put the rural county in deep debt, with millions coming due in December. The bond issue would enable the county to keep its services running smoothly but would eventually lead to a rise in property taxes that would strain municipal budgets over the next year.

Failure to pass the bond could lead to Washington County running out of money, endangering core functions including the sheriff’s office and jail.

Maine’s laws do not contemplate this kind of a situation. It means that the county may have to ask the Legislature for a special bailout that would be unprecedented in recent history.

“If the bond does not pass, then we’ll have to have an alternative,” Commissioner David Burns told residents at a Thursday meeting. “We don’t know what that alternative will be yet.”

If the bond issue fails, the county will almost certainly run out of funds by the new year, and it also may default on loans. In many states, governments can file Chapter 9 bankruptcy, shielding them from creditors and helping them refinance debts under court supervision.

However, that process can only go forward in states with laws specifically authorizing the process. No such law exists in Maine.

Gov. Janet Mills could assign the state police to help cover reduced or temporarily eliminated policing. But taking over services like the Machias jail may raise legal questions and could require an act of the Legislature.

Few counties have experienced such severe budget woes. Even fewer have occurred in jurisdictions where bankruptcy is not allowed. Nassau County, New York, a wealthy metropolitan county bearing little resemblance to rural Washington County, was barred from declaring bankruptcy. There, the state created a temporary authority to take over the county budget.

Without any clear plan in place, the county is on track for a hard shutdown. Officials have said that cannot happen because the law requires the county to provide essential services, including all public safety services in Unorganized Territory, land without municipal government that makes up a large portion of Washington’s land area.

Once money to write paychecks runs out, services will cease unless the state or possibly the county’s creditor, Machias Savings Bank, acts. State Auditor Matt Dunlap has been in touch with Washington County officials, but he said the state has a limited role in fixing the county’s problems. The Democrat predicted lawmakers would feel pressure to act if things get dire.

“There would be some significant questions that may have to be picked up by the Legislature on an emergency basis, but that’d be decisions that have to be made by the Legislature and the governor,” he said.

The county’s all-Republican legislative delegation has not yet presented any strategy. They also don’t agree on the next steps. Rep. Tiffany Strout of Harrington is set to serve on Washington County’s budget committee and supports the bond, while Rep. Will Tuell of East Machias has already come out against the proposal.

“I have to believe that there is no way the county jail is going to close down and all inmates are going to be set free, and that there’s going to be no law enforcement,” he said. “Ultimately, the county is going to continue.”

Burns said Thursday that he doesn’t anticipate that the county will need to spend more than the estimated $11 million, and it may end up spending less. The lack of clarity frustrated many Washington County residents who turned up at Thursday’s budget hearing. Part-time Lubec resident Linda Rendleman was one of them.

“It’s less than 60 days away from the vote,” she said. “It’s very concerning that there’s not some plan to review to understand what things will look like if [the bond issue] does not pass.”

Referencing the courthouse chamber packed with discontented constituents, Rendleman added, “the temperature is that it could not.”

Burns promised that a plan B for the county would be presented as soon as commissioners understood the possibilities themselves. He has talked to both Dunlap and Mills’ office, the latter of which responded to a request for comment by saying only it is “monitoring the situation.”

“As soon as we have something that is plausible, something that we can actually make happen, we’ll give that to you,” Burns told residents.