At the initial meeting of Chatham Concerned Taxpayers on February 4th we indicated that our goal was to avoid all increases in property taxes for fiscal 2010. This, as a practical matter, meant holding the spending in the operating budget to approximately fiscal 2009 levels and instituting a "pause" in capital spending and authorizations.

Since then, in poring through the spending plans of the school department and the other departments of the town, it became quickly clear that a solution exists that will avoid personnel layoffs and maintain Chatham's levels of excellent quality services in the schools and elsewhere. Rather than a 5% increase in property taxes to support a bigger spending plan, the increase in property taxes can be completely eliminated.

A concern is that revenues may fall below those currently estimated by the Town Manager, so caution is even more necessary.

The solution is aided by the fact that the nation is now in a ZERO inflationary period. An across-the-board freeze in compensation at fiscal 2009 levels will eliminate the need for about 70% of the proposed spending increases. Of the $300 thousand or so more in additional spending reductions needed, our team has already identified about $100 thousand. In a $32 million budget, finding waste and non-essential and unnecessary spending should not be a significant challenge with the Selectmen, the Finance Committee and the volunteers of Chatham Concerned Taxpayers all working on it.

The following is the draft plan as of February 10th.

A PLAN TO AVOID PROPERTY TAX INCREASES AND LAYOFFS

IN CHATHAM

FROM
CHATHAM CONCERNED TAXPAYERS

The draft spending plan for all town operations increases spending by $1.268 million. That’s a 5% increase when most every city and town in Massachusetts is slashing spending and laying off employees.

We are in an extraordinary time of financial chaos and great uncertainty which almost surely will continue through FY10 and FY11. It is also an unprecedented time of zero inflation.

Chatham taxpayers have been good to the town, financing competitive salaries for employees and excellent facilities.

But this is a different time.

We must recognize that the taxpayers of the town, particularly the residents, are looking to Chatham’s public officials to recognize the difficulties they are facing. They do not want their property taxes to go up.

There should be no increase in property taxes for any purpose for fiscal 2010; new growth can be added to the tax rolls, however.

This can be accomplished by holding fiscal 2010 spending to fiscal 2009 levels and declaring a pause in all capital spending for fiscal 2010. The taxpayer has to be protected on capital spending as well. There should be a “pause” on capital spending and even a rollback in authorizations. Modest buildings to meet the needs of the town should be built, not buildings that are grand and built to someone’s wish list. To avoid waste and unnecessary expense, the Town should hold off on committing to rental space for annex employees during an anticipated building period when a delay in annex construction and even a shrinking to less costly alternatives may well be approved by town meeting in May.

How this can be done:

Since the nation is now in a ZERO inflation environment, it makes sense to freeze all compensation for town and school employees at fiscal 2009 levels. With those savings in the proposed fiscal 2010 budget, the Town need only find approximately $300 thousand in reduced spending increases in its $32 million budget.

Spending on capital projects should be frozen and no new capital spending authorized except for debt service on outstanding securities.

The Numbers:

Proposed is a $1.268 million increase in spending to $32.757 million.

New growth from new homes and additions will give the Town $250 thousand in new property tax revenue. No problems with that.

That leaves $1.02 million to deal with to get to the fiscal 2009 level.

By freezing compensation at fiscal 2009 levels the funding gap to get to fiscal 2009 budget level drops to about $305K.

$1.268 million of increase
- 250 new growth
$ 1.018
- 713K freeze $350K schools + $363K town
$ 305 K

We are confident that with the aid of the School Committee, the Finance Committee and volunteers from Chatham Concerned Taxpayers, the Town can identify savings of $305 thousand in the $32 million spending plan that will bridge the final gap and avoid property tax increases.

This is how the property tax increase was designed:

The draft spending plan for FY10 was prepared on the assumption there would be three pieces involving the property tax that would increase the property tax levy to pay for the budget growth of $1.268 million. That’s about $120 for a $600,000 assessed property.

The first piece, new growth (somebody built a new house or an addition), adds about $250K to the tax base which only affects those who did the improvements. That’s okay.

The second piece is the insidious 2 ½ “allowed” increase. Proposition 2 ½ set 2 ½ as an annual LIMIT to property tax growth, but for many communities it is treated as a given, which it is not. This would increase the property tax levy by about $520 thousand, according to the Town Manager’s figures.

The third is the “deficit” or what is rightly called “overspending” which the draft spending plan proposes to solve by the override, a special vote of town meeting jacking up the assessment enough to pay for the $550,000 or $600,000 of overspending. The override is a very poor precedent and its effect lasts forever, because the amount of the override gets built into the property tax levy base. For the taxpayer, there is just one bill for his property taxes, so it’s the responsibility of the Town to bring spending within limits. When taxpayers are struggling to live within their means, the Town should do its part.

To summarize, as to the Chatham spending plan for fiscal 2010, this is what should be done:

There should be no increase made or authorization given to increase the property tax levy for fiscal year 2010, except to the extent of new growth.

This can be accomplished by an across-the-board compensation freeze at FY09 levels together with reductions in the $32 million spending plan of approximately $300 thousand in spending increases and a pause in all capital projects for fiscal year 2010. Projects such as the George Ryder Road annex and the fire facilities should be reworked to meet town needs for less cost.

Since only the School Committee can decide on school expenditures, the Selectmen should advise the School Committee they will recommend that Town Meeting only appropriate money sufficient to fund the School Department as if the schools were freezing staffing and compensation at FY2009 levels. In addition, the Selectmen should transmit to the School Committee their recommendations for further savings that they identified during their review of the Schools Department budget.

Unions which decide voluntarily to accept the freeze on union member compensation will thereby avoid layoffs of their personnel.

February 10, 2009 Draft