"CHATHAM BUDGET IS STILL TOO RICH," FINANCE COMMITTEE MEMBERS WILL TELL SELECTMEN
At a special Selectmen’s meeting Monday, March 23rd, members of the Finance Committee will tell the Selectmen the Fiscal 2010 budget they have proposed is too rich.
Though the Selectmen and Town Manager have done a commendable job thus far in reducing the hit on the property tax from $1.268 million to $625,000 or so, that $650,000 reduction did not come from a reduction in increases in spending but principally from raiding reserve accounts that may well be needed as conditions worsen during the upcoming fiscal year beginning July 1. As one Finance Committee member put it, that’s “dangerous.”
That’s why the Finance Committee voted to reject the budget.
At its meeting last Thursday members discussed at length where cuts could be made and numbers added up to well over one million dollars.
The biggest obstacle is the iron stance of the unions insisting on their big pay raises despite the economic storm battering the taxpayers. These pay raises add more than $780,000 to the budget and run as high as 6 and 7% in some cases. (It is estimated that the great majority of full-time town employees have compensation packages yielding more than the incomes of half of the households of Chatham.) If one were looking just at a cost of living adjustment in today’s environment, there would be none, since inflation is at zero and projected to continue declining. Even if pay raises were cut in half they would be still be in excess of the 1.7% declining inflation number of November used as a base for increases. As anyone reading the Boston or Cape papers knows, union and non-union employees elsewhere, from Boston to Provincetown, are voluntarily agreeing to smaller increases, in some cases, zero. They have accepted the fact that “we are all in this together.”
“Free cash,” described by the Town Manager as “the first hedge against economic decline,” is being tapped for over $1 million for capital spending that presumably can’t be delayed. (About $930,000 is being spent on the transfer station, most from free cash but $280,000 from the Stabilization Fund, another major reserve for bad times.)
In addition to the reduction or elimination of pay raises and delay in capital projects, Finance Committee members are ready to identify cuts that can be made totaling well over $250,000. In total, there is more than enough to refill the reserves to where they should be to be “hedges against economic decline” and to avoid any increase in property taxes altogether for the ordinary taxpayer.
The Finance Committee wrestled with the interests of the stressed and strapped taxpayers, the interests of public employees and of students in the schools and the desire for the continuation of services as close to normal as possible. What they took into account:
First, the desire to avoid placing additional financial burdens on the property taxpayer, with concern focusing mostly on those who live in Chatham, the many retired and seniors experiencing drops in assets and incomes and the modest working families among which unemployment is said to be already 11%, reportedly worse than the usual off-season situation.
Second, the wish to avoid layoffs if the economy continues to worsen coupled with the sense that compensation increases in all departments, including the schools, are far out of step with the times and would be using up revenues that might be needed later to avoid layoffs.
Third, the need to be cautious about expected non- property tax revenues which support the budget, such as motor vehicle excise taxes and hotel/motel tax revenues and even water. Generally, revenues for fiscal 2010 are projected to be at fiscal 2009 levels. Only about $25 million of the $32 million budget comes from property taxes, so those other revenues are critical.
Fourth, the need to preserve funds that might be needed should the downturn deepen, such as free cash and monies in the Stabilization Fund and other funds.
Rather than go into fiscal 2010 with depleted reserves, actual reductions in proposed INCREASES IN SPENDING need to be made. Replenished reserves then will be available to help avoid personnel layoffs should economic decline continue and non-property tax revenues come in below forecast.
In extraordinary times like these, prudence and caution should be the watchwords.
The school department, responsible for the largest single dollar and percentage increase of any department, should not remain so aloof from the financial challenge facing the town, but should work with the Selectmen, the Town Manager, the Finance Committee and the unions to achieve a result that will be best for the town, its taxpayers, employees and the residents and students who are served. All should step up to the responsibilities of leadership and not leave the solution to the Annual Town Meeting in May.