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Sagadahoc County commissioners weigh allowing towns to split tax payments to ease cash‑flow
Summary
At a workshop, commissioners reviewed scenarios for letting municipalities pay county tax in two installments, examined fund‑balance shortfalls and borrowing options, requested modeling for Sept/Mar and Oct/Mar plans, and moved into an executive session for follow‑up.
Sagadahoc County commissioners met in a workshop to review how a recent change in state law could let municipalities split their county tax into multiple payments, aiming to ease municipal cash‑flow without harming county finances.
Staff presented spreadsheets that modeled several options, including the status quo (one payment in October) and splits such as September/December, September/March and October/March. The staff member said, "As of FY '26, we are at $1.3 million," and noted that represented roughly 10.5% of an approximately $13 million operating budget, below the Government Finance Officers Association recommendation of 12–15%.
The presentations showed that different split schedules produce different county cash‑flow and interest outcomes. The staff member said some two‑payment scenarios (notably a September/March split) would materially reduce county interest earnings compared with the current single payment, while other splits produced only modest differences. Commissioners pressed on which expenditures are regular (payroll, monthly benefits) and which are unpredictable (vehicle purchases, capital projects), because those patterns affect how long the county could sustain lower short‑term balances.
Commissioners discussed borrowing options to smooth any transition. One commissioner noted the county previously used tax anticipation notes (TANs); staff estimated that a $1 million TAN for one month would cost about $3,500 in interest and that bond‑counsel and related fees could total roughly $15,000. The staff member said the county has contacted counsel (Bernstein Sherr) for legal guidance about whether the county can legally offer incentives for early payment and would share the firm’s advice when received.
Municipal representatives described varied local billing practices. Several towns indicated they prefer an October/March split to align with local schedules; others favored September/March to preserve municipal interest income. One municipal attendee said their select board's preference would be September and March "because we get to keep more of our interest." Commissioners cautioned that any change must avoid placing the county at financial risk or relying on interest income to balance the budget.
On next steps, commissioners asked staff to run additional models including worst‑case assumptions (no towns pay early) and scenarios that assume Richmond, Bowdoinham and Thompson would pay early. The Chair said the item would appear on the regular meeting later that afternoon and invited participants to a follow‑up workshop in about a month to review the modeling and whether the county could implement changes in the current fiscal year.
Near the end of the session the Chair moved the board into executive session "pursuant to Title 1, MRSA §405(6)(A)," the motion was seconded and the board voted all in favor.
The board directed staff to return with clarified scenarios (including September/March and October/March timing and a worst‑case model) and with legal counsel’s guidance on incentives and statutory constraints before any formal policy change is proposed.
