Oak Bluffs town officials plan a special town meeting, most likely in February, to cut spending in the current budget year.
Selectmen will ask voters to cut $240,000 from the spending authorized at the annual town meeting last spring, according to town administrator Michael Dutton.
For the second consecutive year, the town’s revenues have fallen short of planned spending, forcing a difficult mid-year adjustment.
“Voters have voted reduced budgets, but our revenue has fallen off more than our expenditures have been reduced,” Mr. Dutton said.
Bill McGrath, chairman of the finance and advisory committee did not receive the news of a significant shortfall cheerfully.
“I was unhappily surprised,” Mr. McGrath said. “I’ve been unhappily surprised a lot. Essentially we’re at the point where we ought to have the budget well in hand, and we don’t seem to be there.”
The finance and advisory committee will meet today to address the shortfall.
At their annual town meeting, Oak Bluffs voters approved a $24 million operating budget, a five percent increase in spending over the previous fiscal year. Finance officials attributed most of the increase to the rising cost of health insurance, contractual raises for town employees, and increases in school budgets.
The revenue shortfall comes even though the town has added new revenue sources this year. At the April town meeting, voters approved a three-quarters of one percent tax hike on meals. Budget writers estimated the tax increase would yield $200,000 in new revenue. Mr. Dutton said because of a lag in state distribution of the local option tax, the town expects to bring in about $185,000 for the fiscal year. To date, the meals tax has generated $117,800 in new revenue.
Selectmen increased fees for trash collection effective November 1, yielding more new revenue.
Later that month, special town meeting voters authorized higher fees for documents issued by the clerk, such as birth certificates and marriage licenses. Also at that meeting, voters approved a two percent increase in the rooms tax, which is expected to generate $100,000. The town will not realize significant revenue from the meals tax, however, until the next fiscal year.
Mr. Dutton said he would advise selectmen at their meeting next Tuesday that the shortfall is a structural deficit and requires a long-term solution.
“Once we get through FY2011, we will have difficult choices to make in FY2012 in order to avoid the same deficit problem a year from now,” Mr. Dutton said. “It is going to be very difficult to provide the same services with even less staff. For example, we have already gone from thirteen people in the financial areas to five. We have cut the shellfish department down to one, with some additional part-time help. The town will have to decide either to give up some services, increase taxes, or a combination of both.”
Oak Bluffs has reduced planned spending already, by leaving four positions vacant, but that resulted in other complications. One of the positions is finance director, left open after Paul Manzi died last fall. The town has struggled to keep up with its financial workload.
Taxpayers were recently advised that tax and water bills will be more than a month late this year, because of a delay in setting the tax rate. The town has also operated without a zoning administrator or a reference librarian for part of the fiscal year.
Even if the town decides to leave those positions vacant, voters must trim about $100,000 from other town departments.
“It’s going to mean a reduction in budgets,” Duncan Ross, chairman of the selectmen said. “It’s probably going to mean some staff reduction. It certainly means we won’t be able to hire some of the people we hoped to hire.”
Mr. Ross said selectmen have few options to cut spending, except reducing hours or laying off town workers.
“Unfortunately, that’s what it comes down to,” Mr. Ross said. “As far as I know most of the budgets of the different town departments are right down to the bone. You can’t tell the fire department or the police to stop buying gas.”
Mr. Dutton said maintenance cuts saved money over the past two years, but will create other problems down the line.
“We have roads and buildings in poor repair and equipment on its last legs,” Mr. Dutton said. “Each year we defer maintenance it will cost proportionally more to fix or replace later on.”
Mr. Ross predicted voters will see a general Proposition 2.5 override question at the annual town meeting and on the ballot in April. That will mean a hike in property taxes.
“Otherwise, we’re going to be doing this every year,” Mr. Ross said. “I know people complain about taxes, it’s a national sport. But if you look at a town comparable to Oak Bluffs out in the middle of the country, you will see our taxes are not that high.”
Voters rejected 11 override questions totalling $618,991 by overwhelming margins in the spring election. Most of those override questions would have restored previous spending cuts.