Key Players in Budget Review: 2009 Archives
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.
The key players in the budget discussions in Chatham are the elected members of the Board of Selectmen and the School Committee.
The Town Manager reports to the Selectmen.
The Superintendent of Schools reports to the School Committee.
The Finance Committee members, appointed by the Town Moderator, review the proposed spending plans and make recommendations to the members of the Town Meeting convening in May.
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The Chatham draft spending plan for FY10 (begins July 1, ends June 30 2010) assumes everyone's property tax will go up about 5%. The Chatham Concerned Taxpayers position is that that should not happen.
Here are the numbers in brief:
FY09 $31.401 million
FY10 $32.757 million
Increase $ 1.268 million
Now, new property is coming on to the tax rolls for the first time in FY10 (new homes, additions and the like) and it's fair to add new growth like that to the base.
So the increase for all property taxpayers is about $1.02 million.
Though taxpayers get one bill for real property taxes, the spending plan is put together by the Town Manager under the elected Board of Selectmen for all the departments except the School Department. The Superintendent of Schools under the aegis of the elected School Committee constructs her spending plan.
The Finance Committee appointed by the Town Moderator will carefully review the spending plans of the Town Manager and the Superintendant of Schools and will report directly to the Town Meeting in May that has the power to accept or reject the spending plan for FY10. The Selectmen will also provide their recommendations to the Town Meeting in May.
Because of the worst financial situation since the1930s the Selectmen are devoting an unprecedented amount of time to the budget. Is such a huge increase in the budget fair to impose on the taxpayers of the town in these difficult times, who, as can be seen by the chart of spending growth (scroll down), have been quite generous in putting up the money for salaries and facilities for the town? Especially, according to recently released federal government statistics, at a time of zero inflation?