Small Towns in Maine are in need of a strong Home Rule defense against the encroaching public-private corporate state that has been amassing centralized power ever since 1976 when the Legislature declared that centrally managing the economy is an essential government function seven years after the Home Rule Amendment was added to the Maine Constitution in 1969.
The longer the public sector collaborates with the private sector, the more the functions and properties that are intended to distinguish one from the other, blend together until big business levies taxes and writes the laws and the big government cloaks itself in secrecy.
Rome, Maine is a municipality that wants out of a contractual agreement codified in a special act of legislation in 1999 in an innovative twist on state corporate welfare, a function that the State continually reinvents in a myriad of forms serving the same principle, captive public capitalization of private industry.
The act that created the Kennebec Regional Development Authority makes a large region of municipalities beholden to it and required to pay annual tax assessments to underwrite the corporation,
I have long upheld that the KRDA is a clear violation of Article IV Part Third section 14 of the Maine Constitution, which states:
Section 14. Corporations, formed under general laws. Corporations shall be formed under general laws, and shall not be created by special Acts of the Legislature, except for municipal purposes, and in cases where the objects of the corporation cannot otherwise be attained; and, however formed, they shall forever be subject to the general laws of the State. (emphasis by author)
Private & Special Acts: Laws Exist Outside the Structural System Of Maine Law Organized by Titles
There is no Title called “Private and Special Laws” in the Maine Titles List, so there is no way to search “Private and Special Laws” as a category. That makes An Act to Create the Kennebec Regional Development Authority, a Chapter without a Title floating around outside the common structure of the Maine Statutes, an exception to the rule of constitutional law, an act of innovation by the Maine Legislature, long before the Legislature got the idea of codifying a right for special interests to innovate their own laws as found in the LD 1845 An Act To Amend The Educational Statutes, enacted in April 2022
A picture emerges of a shadow government constructed alongside the constitutional government. The shadow government has been slowly but surely developing in structure and is ready to finalize its shifting of place with Maine’s constitutional government.
There is nothing to debate about whether or not KRDA was created by a special act because the section heading under which the KRDA is filed in the Maine statutes is PRIVATE & SPECIAL LAWS Second Regular Session of the 118th
Be it enacted by the People of the State of Maine as follows:
Sec. 1. Kennebec Regional Development Authority established; incorporation; purposes. The territory, cities, towns and plantations that on the effective date of this Act comprise the so-called Kennebec Valley Economic Development District, or any combination of such cities, towns and plantations, constitute a body politic and corporate to be known as the Kennebec Regional Development Authority, referred to in this Act as the "authority," for the benefit and welfare of the inhabitants thereof and to: link
That leaves the constitutional argument that posits the KRDA as serving a municipal purpose, and/or a corporation whose object cannot be achieved in the private sector (or, in the language of Article Iv Part Third Section 14-an object that cannot otherwise be attained), based on the KRDA’s function as central management and control over a region of municipalities, taking on aspects of government, and justified under the all-encompassing rubric of economic development.
Such an argument is discredited by the fact that the KRDA deprives member municipalities of their sovereign rights to manage their own affairs as this story will tell.
Perhaps some would put forth the argument that the object of the corporation cannot be attained in the private sector because a development corporation chartered under general laws in the private sector cannot levy taxes and therefore can only be done by a special act of legislation, but that discounts the rest of the Maine Constitution.
The KRDA also violates Section Eight Taxation of the Maine Constitution which says:
Section 9. Power of taxation. The Legislature shall never, in any manner, suspend or surrender the power of taxation.
The KRDA is vested by the Maine Legislature with the power to collect taxes. If a town defaults, the special act of legislation grants the KRDA the authority to take ownership of private residential property. The enabling legislation does not say how it will be decided which resident’s property will be taken. A lottery would be the fairest method of executing such an unjust law, but as it stands, it is left up to the arbitrary whims of the corporation and can conceivably be used as political retribution emulating the powers of an authoritarian government.
The above is not necessary to be included in this special act of legislation as it reiterates a general law §5701. Debt liability, enacted in 1998 only one year previous to the enactment of the KRDA and is found under Title Thirty governing municipalities and counties in the Maine Revised Statutes.
§5701. Debt liability
The personal property of the residents and the real estate within the boundaries of a municipality, village corporation or other quasi-municipal corporation may be taken to pay any debt due from the body corporate. The owner of property taken under this section may recover from the municipality or quasi-municipal corporation under Title 14, section 4953. [PL 1987, c. 737, Pt. A, §2 (NEW); PL 1987, c. 737, Pt. C, §106 (NEW); PL 1989, c. 6 (AMD); PL 1989, c. 9, §2 (AMD); PL 1989, c. 104, Pt. C, §§8, 10 (AMD).]
To make sure that there was no mistaking that the KRDA has the right to take the private property of residents in the region it governs, It is repeated again in the enabling legislation Under Section 4: How Financed:
These bonds and notes are legal obligations of the authority, which is hereby declared to be a quasi-municipal corporation within the meaning of the Maine Revised Statutes, Title 3D-A, section 5701, and all the provisions of that section apply to the 'authority. (emphasis by author)
Was there no public outrage against §5701 Debt liability? Is that because it passed silently through the legislature without media attention so there was very little possibility that a public referendum could be organized to repeal it?
Although the act that chartered the Kennebec Regional Development Authority is clearly identified as private and special law chartering a corporation, no one has challenged The KRDA’s legality under the Maine Constitution, but given its enormous financial powers and its authority to arbitrarily take private property to pay its own debt, it needs to be challenged in this age when authoritarian governments are on the rise across the world.
The enormous financial power granted to the KRDA is described in Section 2 General Powers of the enabling legislation. Here is an example of its powers:
Speculatatiively, given the wide range of financial functions granted to the corporation, it is possible for its partners and associates to profit from the KRDA’s operations, while the KRDA operates at a loss allowing it to hold the municipalities as captive financiers of its operations.
The benefit that the municipalities receive in exchange for funding the KRDA as outlined in the enabling legislation is non-specific general services that can take place in many diverse forms, not requiring a central agency. The most tangible function of the KRDA is a business park called First Park, which is not specifically included in the enabling legislation but the vast array of financial powers granted to the KRDA in the enabling legislation allows it to create such a park.
The website for First Park is a dot com indicating a private entity. At the top of the About Us menu is the Region Businesses category which opens up to a page with many business logos. Upon first glance, the impression conveyed is that these are businesses located in First Park but they are logos of businesses located across the region that pays taxes to finance First Park. The businesses actually located at First Park are in a text list without logos under Park Directory.
In business negotiations, terms of exchange are usually specific, such as when the State negotiates with corporations for public subsidization of the corporation’s capitalization. In that case, the subsidies are a specific percentage of capitalization in exchange for a given quantity of jobs at higher than average wages and benefits, which in turn provides the state a specific quantifiable stream of personal income tax revenue. The parties that directly benefit, benefit in a specific way, that is funded by the general taxpayer and promoted as job creation that benefits all through the hypothetical trickle-down effect, which has been established as a trickle-up effect in the years since 1976 when the centralized economy was deemed into being by the Maine Legislature.
According to the First Park Enabling Legislation, the municipalities right to withdraw is contingent upon the corporation making an income sufficient to pay the indebtedness and expenses of the authority for the preceding fiscal year.
A city, town or plantation that is already a member of the authority may vote to withdraw its membership; however, it continues to be legally obligated on any outstanding indebtedness of the authority until such time as all of the indebtedness is paid in full. The withdrawal only becomes effective on the date that marks the end of a fiscal year of the authority that is preceded by a full fiscal year in which the income was at least sufficient to pay the indebtedness and expenses of the authority for that fiscal year.
Twenty-three years after its founding, in the fiscal year ending in 2022, the audit and financial report of the KRDA showed actual revenue over expense was $297,222 or $296,346 more than budgeted.
The Town of Rome submitted its letter of intent to withdraw on September 22nd, 2022.
I was not witness to the December 2022 meeting of the General Assembly that voted to deny Rome’s right to withdraw but rumor has it that influential attorney Craig Nelson who takes credit for helping to organize the KRDA, convinced nine out of nine General Assembly representatives that it would violate the special act of legislation that created the KRDA, should they permit Rome to withdraw.
Despite the blatant violations of the Maine Constitution, the other municipalities cower in fear of transgressing the legislative act that chartered the KRDA.
I am astounded that not one of the representatives acted as though they themselves had taken the time to read the enabling legislation, correctly parse a letter that was sent by the KRDA’s accounting firm or read the Full Audit Report
The letter from the accounting firm to the General Assembly reads like it was instigated by a hierarchical order coming down from the KRDA instructing the accounting firm to write a letter describing what the accounting would look like if an arbitrary procedure were applied that would result in a reduction of revenue for the fiscal year ending in 2022. The letter could have described any arbitrary procedure or combination thereof. For instance, it might have described the results of the accounting if a procedure were applied that eliminated all expenses. The results of this letter should be written up and studied in the journals of cognitive science or heralded as a mastermind of political manipulation.
But first, put the letter in the context of events. In the year previous, another letter was sent on request to Jim Dingle, the executive board director of the Kennebec Regional Development Authority from James N Katsiaficus of the law firm Perkins Thompson.
The subject of Mr. Katsiaficus's letter is “ Ability of a Kennebec Regional Development Authority to Withdraw Membership”
Mr. Katsiaficus's letter acknowledges that the condition of meeting the debt liability is satisfied but says that the second condition, the sufficiency of income may be an impediment and goes on to assert that “the revenue from assessments of each municipality is not considered income - under Section 10 those assessments include "the amount over the estimated income of the authority that is required to meet the expenses in the improved budget" plus debt service" If there is an assessment in any fiscal year, then it is because the Authorities income is not sufficient to pay expenses,"
The word “may” seems key here- as may be that we can float this to impede a municipality from leaving.
Section 10 is titled “Annual Reports and Budget: Levy of Taxes. It instructs the General assembly to make a report of its doing at the end of each fiscal year that ends on June 30. The report is due not later than July 31st (for the closing fiscal year) Below is the section showing revenues from the audit and financial report for the fiscal year ending June 30, 2022: Assessments (paid by municipalities) are reported as income:
Section 10 then goes on to describe another report due the first day of September. This report has to address the concerns of the upcoming year since the year ending on June 30 has been closed out. It is in the report due before the first of September where the words quoted by Mr. Katsiaficus are found “the amount over the estimated income of the authority that is required to meet the expenses in the improved budget", This discussion pertains to calculating assessments for the upcoming year- which is the same way the assessments would have been calculated for the previous year, which are represented as revenue in the audit and financial report. Mr. Katsiaficus is arguing that because the word income is used, in calculating the assessment due from the municipality, municipal assessments are not included in revenue, but Investopedia says this:
Revenue is the total amount of income generated by the sale of goods or services related to the company's primary operations. Investopedia
That makes perfect sense.
Furthermore, whether or not the municipal assessments are included in revenue should be in the previous reports.
On Dec 9, 2022. Mindy J Cyr, CPA of Maine Municipal Audit Services, sent this letter to th General Assembly of the Kennebec Regional Development Authority (Assembly of all the Municipalities).
The Title of the report is Independent Accountant’s Report On Applying Agreed Upon Procedures
Neither the title nor the text identifies how or by whom procedures were agreed upon.
The “agreed-upon procedure” is to calculate what the revenues of KRDA would be if the contributions from the municipalities are excluded. The conclusion is that if the contribution made by municipalities is subtracted from revenues, then the revenues are less than the expenditures.
The letter does not say that the procedure is legally defined as the method for calculating revenues in the enabling legislation, by the bylaws, or by any other authoritative source. The letter, as written by the CPA, clearly not by choice but by instruction, merely states “This is what the result would be if the agreed upon procedure (excluding municipal assessments from revenue) is applied.”
The author of the letter, Mindy J Cyr, CPA of Maine Municipal Audit Services, makes clear that the results of the applied procedure are provided as information only, amplifying that the accountants are not offering an opinion about anything or saying that the information provided pertains to any opinion offered by the accountants, they were not engaged to conduct an audit, the objective of which would be to express an opinion. The letter clearly states that the accountant’s opinion is in the Full Audit Report completed on August 9, 2022, and that the procedure described in the letter has no relevance to that opinion. which showed actual revenue over expense was $297,222 or $296,346 more than budgeted. The revenue as reported in the Full Audit Report is the basis of Rome’s legal claim to the right to withdraw.
The disassociated information was sent to the General Assembly by the accountants presumably at the request of the KRDA. The effect of the letter is to gaslight the results of the Full Accounting Report, which is clearly identified in the letter as the document that expresses the CPA’s opinion.
Somehow nine members of the KRDA missed what was clearly stated in the letter - that the procedure had no bearing on the accountant’s opinion which is stated in the Full Audit Report. I am astounded that the municipal representatives responsible for the interests of the inhabitants of their communities could miss something so clearly stated, and be so easily misled by gaslighting that holds up information bearing no relationship to the matter at hand.
Another issue is the General Assemly’s role in deciding whether Rome can withdraw since Rome joined on the basis of the enabling legislation. At the end of Mr. Katsiaficus’s letter he says that both joining and withdrawing from the KRDA require a municipal referendum.
But there is a better way than fighting that battle for Rome to get out of the KRDA.
I was doing some research on another matter and I came across a statute enacted in 1987, under Title 30-A: MUNICIPALITIES AND COUNTIES
Part 2: MUNICIPALITIES Subpart 2: ORGANIZATION AND INTERLOCAL COOPERATION Chapter 111: HOME RULE.
§2107. Effect of private and special laws
Private and special laws applying to a municipality remain in effect until repealed or amended by a charter revision, adoption, modification or amendment under this chapter. [PL 1987, c. 737, Pt. A, §2 (NEW); PL 1987, c. 737, Pt. C, §106 (NEW); PL 1989, c. 6 (AMD); PL 1989, c. 9, §2 (AMD); PL 1989, c. 104, Pt. C, §§8, 10 (AMD).]
Given that this is in Chapter111:Home Rule, it makes sense that the charter intended here is a municipal charter.
So Rome, Maine does have a path to exiting The Kennebec Regional Development Authority Thanks to The Home Rule Amendment!
Rome Maine does not currently have a Town Charter and so it must form one to use this exit path. Something every municipality should do. You never know when it will be needed!