Fiscal year 2010 begins today, July 1, 2009.

It's worth reviewing what this means for Chatham taxpayers.

In February, Chatham Concerned Taxpayers had urged the Selectmen, in light of the harsh economic realities suffered by resident and other taxpayers because of the world financial collapse, to hold FY10 spending to the FY09 level and not to increase the property tax levy.

The Selectmen spent several weeks reviewing the budget but did not make a single cut in the spending proposed by the Town Administration. What began as a proposed spending increase over FY09 of about $1.3 million wound up ultimately, after the Annual Town Meeting, as a spending increase very close to that figure. The core property tax levy was raised $770,000. In effect, CCT’s urging that the taxpayers’ interests in these difficult times be taken into account was ignored.

There was a real battle over the proposed spending increases on the floor of the Annual Town Meeting on May 11th. Taxpayers were angry at the proposed increase. At the same time they were understandably confused by the way the spending plan was presented in the Town Warrant. Town officials split the usual operating budget up into several pieces and scattered it over six Articles (excluding the water department, which is self-supporting).

This approach hid the true level of spending, which was far in excess of expected FY10 revenues, and how it was to be financed.

Town officials confused matters further with a last-minute announcement as Town Meeting opened of an amendment to the spending plan printed in the Town Warrant of a savings of some $350,000. This resulted from a bond refinancing which had been suggested by Chatham Concerned Taxpayers to town officials much earlier on February 18th.

How that spending plan was presented and financed was described in detail on the CCT website May 7th through May 10th (for example, here and here).

Suffice it to say that the “true” spending program presented to Town Meeting – including the last-minute announced refinancing savings of $340,000 -- was approximately $34.4 million, $1.8 million in excess of revenues expected in FY10.

In this confused situation, the matter was put to a vote and, despite the opposition of hundreds of taxpayers, town officials won the key vote.

Total spending in the six-part operating budget was well in excess of what was allowed by Proposition 2 1/2. Ordinarily, overrides and Capital Exclusions would have been sought for the excess $1.8 million. However, doing so would have required ratifying votes at the Town Election three days later. This would have been an opportunity for voters to reflect on the significance of the deficit budget they had approved and to vote NO in secret balloting.

Instead, by using emergency and other reserve funds and free cash left over from prior years to fund the $1.8 million deficit, no such votes were necessary.

Of course, there was no emergency to justify raiding the Stabilization Fund since the business-as-usual operating budget was not cut at all and included approximately $850,000 in increases in salaries and benefits for town employees, some salary increases ranging as high as 7% and 8%. The Town’s unions had rejected a call for a voluntary freeze in compensation and town officials did not press the matter. Other Cape towns level-funded or cut budgets and many unions agreed to voluntary freezes.

Before town meeting CCT and the Finance Committee both sought to find out if Local Receipts (estimated at about $8.7 million for both FY09 and FY10) were holding up. Neither of us received the reports requested – and still haven’t as of this writing.

CCT had urged for caution in the FY10 budget to save money in case other revenues fell off during the year, threatening layoffs.

So FY10 begins with a spendiing plan $1.8 million in deficit, the Stabilization Fund below the target level of $2 million set several years before and FY09 free cash estimated to be about one-quarter of what it had been the year before. Where will the money come from to even maintain the FY10 spending level in FY11, even assuming FY 10 revenues hold up?