AUGUSTA — Members of the Legislature’s Joint Standing Committee on State and Local Government voted unanimously to table a bill intended to provide bankruptcy protection to Maine counties and municipalities Wednesday after the bill changed direction, setting up the possibility of a second public hearing on L.D. 2009.
The bill, 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 they have exhausted all other reasonable options to avoid bankruptcy.
At a public hearing last month, banking institutions warned that even the possibility of a town or county seeking bankruptcy could drive up interest rates and increase borrowing costs for taxpayers on tax anticipation notes and capital improvement projects.
The Maine County Commissioners Association opposes the bill, as do commissioners in Penobscot and Washington counties.
On Tuesday, Moore sent an email to lawmakers proposing a new direction for the bill, narrowing its focus to counties and adding steps to improve accountability for timely audits instead of providing bankruptcy protections.
On Wednesday, Moore told lawmakers that while current law requires municipalities and counties to conduct annual audits, there is no requirement that those audits be reviewed. The audits are sent to the Office of the State Auditor and posted online.
There is no requirement that the state auditor check the documents or analyze financial practices.
Years ago, county audits were usually submitted about six months after the close of the fiscal year, but that has changed because there are now fewer auditors available to do the work.
Aroostook County has not turned in an audit since 2020, Moore said, noting that many counties appear to be behind in filing audits.
A check of the state auditor’s website shows that Sagadahoc County’s 2021 audit was posted in July 2024, but nothing more recent has been filed.
Piscataquis, Waldo and Washington counties have submitted audits for 2022, but nothing more recent is posted. Androscoggin, Lincoln and Oxford counties have submitted 2023 audits, but none of their 2022 audits appear on the site.
Penobscot County filed its 2022 audit in July 2025. Hancock County’s most recent audit is from 2023.
Cumberland, Franklin, Kennebec, Knox and York counties have all filed audits through 2024.
Somerset is the only county that has filed its 2025 audit with the state, posted in October.
Moore suggested amending her bill to require counties to file their audits on time or risk having the state withhold funding. Municipalities would not be included in the requirement, she said, because she wants to take this first step before considering a broader mandate.
“There really are no checks and balances going on,” she said. “No one is really looking at the audits, so let’s start requiring that they’re being done and being turned in.”
A check of the state auditor’s website shows that municipalities, which are also required to file annual audits, are submitting their reports to the state more quickly than counties.
State Auditor Matt Dunlap, who attended the meeting via Zoom, was asked to weigh in on the bill’s change in direction because it involves his office.
He said that since he has served as state auditor, fewer accounting firms are willing to do government audits, and “we’re seeing fewer people getting into the trade of accounting and auditing, with declining enrollments in these fields at the collegiate level,” including at the University of Maine System, which he said dropped its accounting program more than 10 years ago.
“As Sen. Moore pointed out,” Dunlap said, “oftentimes it is difficult to find people to do the work, even though it is required by law.”
Dunlap said another factor is the cost of audits, which has increased in recent years and can reach $20,000 or more. As a result, some government officials have deferred those expenses for years.
Dunlap acknowledged that audits are not reviewed by anyone in his office, but said he will check them if he receives a complaint.
Without naming the town, he said he pulled one audit after receiving a complaint and “just about fell out of my chair” when he saw it contained what is called an “adverse report,” which cited several violations of generally accepted accounting principles, including the absence of a list of the town’s capital assets.
Dunlap said the town’s audits had contained adverse reports for years, and no one took action to correct the poor practices.
“It didn’t seem to phase them,” he said, “but a town can lose their ability to borrow if they don’t have audits.”
Committee Co‑Chair Rep. Suzanne Salisbury, D‑Westbrook, asked Dunlap if his office had the resources to enforce accountability by tracking audit filings and reporting late audits to the state.
“No,” he said, but added that his office might be able to set aside resources to do more thorough reviews of audits when they are submitted to avoid rude surprises down the road.
“We could go through the audits, reaching out to the auditors themselves and ask what they saw when they were in the town of East Wagonwheel,” Dunlap said, and details of those conversations could then be shared back with towns, counties and the Legislature so public officials would know the content of audits “before you read it in the paper.”
Rep. Randall Greenwood, R‑Wales, asked Dunlap whether the Office of the State Auditor could handle verifying receipt of 16 audits within 12 months of the end of each county’s fiscal year while also managing petitions for extension from counties that could not meet that deadline.
Greenwood also asked if Dunlap had the resources to report a county to the state controller if it was found to not be in compliance, which would trigger action for the state to withhold funding.
Dunlap said the tracking piece was possible, but he preferred “the decision about whether funds were to be withheld to be made at the executive branch level.”
He said his office is not an enforcement agency.
“We don’t fix storm damage,” Dunlap said. “We tell people what the weather is.”
Carrying that analogy forward, Rep. Will Tuell, R-East Machias, asked Dunlap, “When your office is doing reporting on storm damage, would you be amenable to sending a letter to the county that if a waiver isn’t granted, or whatever the case may be, that their time is up and these are the possible ramifications of not complying?”
Dunlap agreed that sharing deadlines is “probably a good pathway for us to pursue here, but we certainly don’t have resources or a mechanism to police entities like county governments to make sure they’re getting their work done.”
Dunlap added that state law requiring annual audits dates to the 1930s, and the penalty for not submitting an audit on time is about $30. But, he said, “I think people have a better understanding of the requirement of audited financial statements at this juncture given what we’ve been going through,” particularly in county government, and “having some kind of tracking does make sense.”
James Cohen, a partner at the law firm Verrill who represents the Maine County Commissioners Association, warned about tying financial penalties to late audit filings because that could further strain growing county budgets.
“The biggest financial challenge for counties is jail funding,” he said. “As time has gone on, half of the county budget has gone to jails. Jails support the state’s criminal justice function and the state has contributed less and less to jails,” which means county taxpayers are footing increasing costs for jail operations every year.
Cohen declined to take a position on the new direction of the bill without speaking with county commissioners. He said he did not think there would be any concern with strict notification requirements, but “where I think counties would have concerns is whether there are penalties attached because those penalties would be financial.”
Counties rely on state funding, Cohen said. He added, “If for some reason those state monies don’t come in during a tax year, what are counties supposed to do?”
If a county is not able to file an audit on time, especially with so few auditors in Maine, and the state withholds funding, Cohen said, “you’re not penalizing county commissioners. You’re penalizing taxpayers,” who would have to pay more for county operations to make up for the lost state funding.
There appeared to be some hesitation among committee members about the financial penalties, but lawmakers seemed to lean toward stricter filing standards and deadlines.
Greenwood, a former Androscoggin County commissioner, said he knew audits had to be filed when he served in that office, and he sees the amended bill as “more encouragement that an audit is done and that it’s done in a timely manner. At some point in time, we need to hold people accountable to the taxpayers.”
After more than a half-hour of discussion, lawmakers unanimously voted to table the bill and give Moore and the Maine County Commissioners Association time to draft language that can be shared with stakeholders.
At that point, Salisbury said, the committee could consider holding a public hearing on the revised language because it is likely to be different from the original bill.
This story was originally published by The Maine Monitor, a nonprofit and nonpartisan news organization. To get regular coverage from The Monitor, sign up for a free Monitor newsletter here.