Our excitement about what the Selectmen might do in their special Friday's meeting for fiscal discipline quickly fizzled as Town Manager Hinchey took control of the proceedings. Nothing would change.

Having guided the Selectmen skillfully through weeks of close scrutiny of the operating budget, the Town Manager finally got them to do exactly what he wanted them to do. The budget he had advanced did not suffer even one reduction in increased spending. The only "cuts" in his $32.757 million budget were downward adjustments due to final costs from third party providers coming in a couple of hundred thousand lower than estimates.

It was a masterful performance. He is really good at what he does.

In the blink of an eye Mr. Hinchey proposed free cash for off-budget capital spending ($1.2 million?) and then allocated Stabilization Fund monies amounting to hundreds of thousands of dollars for off-budget operations spending for the town side and the schools, thereby reducing property tax levy increases this year for the operating budget to $710,000, more or less. An override approval vote for about $190,000 will still be required at the election on May 14th following the Town Meeting on May 11th. (An override is sought when spending would drive the increase in the property tax levy up beyond the 2 1/2% allowed (but not required) by state law.)

The bad news is that that free cash and stabilization money won't be available as a cushion for hard times in fiscal 2010 and 2011. (Free cash and stabilization money were mostly raised by the property tax in prior years in excess of what was actually needed.)

Cost of living increases were approved (the nation is at zero inflation) to the approval of the large complement of town employees attending the meeting.

Ironically, the $700,000 or so increase in the property tax levy for fiscal 2010 for the operating budget is almost exactly the amount of pay increases in the budget. The unionized town and school employees declined to go along with the Selectmen's request for a voluntary compensation freeze. Chatham taxpayers have rewarded their public employees very well over the years and it was hoped the employees would appreciate the stress ordinary citizens were experiencing at this time. If they had, there would be no increase in the property tax for operations. And there would be a strong constituency to resist layoffs if economic conditions deteriorate.

The result is that resident taxpayers will be asked to accept increases in their property taxes to pay for raises -- ranging as high as 7% for fire personnel and 6% for school personnel -- for full-time public employees, most if not almost all of whom already have compensation packages adding up to more than the incomes of roughly half the households in Chatham.

And that's before considering the cost proposals for various capital projects being prepared for articles in the warrant. For example, if the Town were to go forward with the Police Department/Annex project, the first year debt service cost would be about $1.3 million on top of everything else. We're still paying about $1 million a year for the costly and under-utilized Community Center.

The numbers are not yet clear on what the Selectmen will recommend that will drive up property taxes. Nonetheless, the FY10 operating budget is now going over to the Finance Committee for its "official" examination. Because of the financial crisis, the members of the Finance Committee have been informally -- but diligently -- studying the spending plan for some time and now will dive into it in earnest. In a $32 million plus budget, it's hard to believe there's nothing to cut

It is clear that the schools are on a collision course with reality. That they sought increases in spending of the magnitude they did (8% or 10%, depending on how you count) in these awful times indicates they are living in an alternate universe. Town Manager Hinchey predicts that they will become a chronic cause of overspending requests every year in the future unless they mend their ways. While the schools complain the town doesn't give them enough money, the town provides the schools with substantially more dollars than the state requires, about 50% more for fiscal 2009.

Another attitude that must change is the assumption that the town has a right, a duty, even an obligation, to raise the property tax 2 1/2% every year. Town spending has grown 44% in the last eight years, twice as fast as the CPI. Don't be misled: Chatham's low tax rate doesn't mean a thing. What's important is the increase year by year in property taxes. The town is indeed well-run, but is it run as efficiently and as cost-effectively as it should be?

Whatever the Selectmen and the Finance Committee recommend, it is up to Town Meeting to decide whether or not to put up the money, regardless of what the Selectmen have approved or recommend. All public contracts are subject to appropriation and that's what voters do at Town Meeting -- appropriate or don't.

Surely, voters do not want to have a financial crisis develop during fiscal year 2010 or fiscal 2011 because of spending decisions made now that are out of synch with fiscal realities. Chatham is not an island; it is not immune from real world developments. Chatham spending relies in substantial part on revenues from other sources, such as hotel/motel revenues and motor vehicle excise taxes. Will they be as high as projected for fiscal 2010?

In 2008's last quarter, the American economy contracted by 6.8%, the sharpest drop since 1982. The Dow Jones average in February had its worst February since 1933. Chase has cut its dividends 87%, GE, 67%. The Dow, as a predictor of the future, is now at a 12-year low, closing today down about 300. Retired people are suffering and it's no wonder they're scared.

It's a time to be cautious and prudent. Or is there more in the magic hat?