AUGUSTA — A bill originally written to offer bankruptcy protections for towns and counties in Maine has evolved into a proposal requiring county governments to file annual audits within 12 months of the end of each fiscal year, and for the state auditor to review the audits as they are submitted to ensure they are complete.

In what is known as a “strike and replace” bill, lawmakers removed all original language referencing bankruptcy protections for towns and counties and substituted language that shifts the bill’s focus to the timely filing of county audits and their review by the state auditor.

If a county is unable to file an audit on time, the bill allows it to request an extension from the Office of the State Auditor.

All requests for late filing and the resulting decisions would be public records under the bill.

The original bill, L.D. 2009, sponsored by Sen. Marianne Moore, R‑Washington, and co‑sponsored by several other Washington County lawmakers, was intended to provide Chapter 9 protections to counties and municipalities in financial crisis after exhausting all other reasonable options to avoid bankruptcy.

Filed in September, the bill was prompted by the budget crisis in Washington County and offered as a possible way for the county to restructure millions of dollars in debt.

However, during a public hearing in January, members of the Legislature’s Joint Standing Committee on State and Local Government heard warnings from banking institutions and others that even the possibility of a town or county seeking bankruptcy could drive up interest rates and increase borrowing costs on tax anticipation notes and capital improvement projects, ultimately harming taxpayers.

The Maine County Commissioners Association opposed the bill, as did commissioners in Penobscot and Washington counties, based almost entirely on those warnings.

During a work session on the bill earlier this month, Moore proposed removing the bankruptcy protections and focusing instead on creating a firm timeline for counties to file audits, along with a requirement that the state auditor review them as they come in.

State law now requires annual audits but does not set a clear deadline or require the Office of the State Auditor to review them.

Reporting by The Maine Monitor last year found that nearly half of Maine’s 16 counties are years behind on their audits, with Aroostook County only recently completing its audit for 2020.

If audits were filed annually as required, Moore said government officials and the public would have a clearer picture of county finances, perhaps in time to prevent a financial crisis.

Moore had originally proposed imposing financial penalties on counties that failed to file on time, including the possible loss of state funding, but committee members were reluctant to punish taxpayers for public officials’ failings.

On Wednesday, the new language presented to the Joint Standing Committee on State and Local Government was streamlined to mandate filing deadlines and to require the state auditor to post county audits within 30 days of receiving them, a change that will require the office to review each audit for completeness before posting. There is still no requirement that audits be checked for accuracy.

When State Auditor Matt Dunlap spoke at the last work session, he said audits are typically posted as soon as his office receives them, so committee members said they did not expect the 30‑day posting requirement to pose a hardship.

Current law does not require the state auditor to review audits or even post them, but only to accept them as submitted. 

Rep. Will Tuell, R‑East Machias, one of the bill’s sponsors, said requiring audits to be filed on time is important so “people all across the state know that we all want accountability. We all want transparency.”

Tuell expressed frustration with what he described as counties’ resistance to the original bill, saying, “I know that the counties have objected to this for any number of reasons,” but he said he believes counties need a filing deadline.

“We need to move forward with this,” he said.

One reason counties have given for late filings is the shortage of auditors in Maine who are available or willing to take on the work, a factor Moore noted could justify a county’s request for a filing extension.

Tuell said requiring counties to file their audits unless they have an approved extension will show how much of the delay is due to a shortage of auditors, which is something the committee can take into account in the future.

“Going forward,” he said, “this is one step toward accountability and transparency, and I wholeheartedly support it.”

The “strike and replace” language was provided to counties earlier this week, and no one representing the counties spoke at Wednesday’s work session. In her motion to pass the bill, committee chair Rep. Suzanne Salisbury, D‑Westbrook, allowed committee staff members to continue working with Moore on the language if the Maine County Commissioners Association offers any feedback or raises concerns.

The motion passed unanimously.

This story was originally published by The Maine Monitor, a nonprofit civic news organization. To get regular coverage from The Monitor, sign up for a free Monitor newsletter here.