Oak Bluffs town administrator Bob Whritenour told selectmen Tuesday that the town is exactly on target to erase the current $600,000 free cash deficit, with less than one month left in the 2013 fiscal year.
Mr. Whritenour said the town has already collected more than anticipated in local estimated receipts, the revenue from harbor fees, local restaurant and hotel taxes, and other income from sources other than property taxes.
“That’s it, it’s done, we’re there,” Mr. Whritenour said.
With 11 months, or 93 percent of the fiscal year complete, the town has collected 99 percent of all revenues projected in the current budget year. In the same period, the town has spent 90 percent of the money budgeted for operating expenses.
“That’s a clear indication; it shows we’re collecting a little bit more than our budget, and spending a little bit less,” Mr. Whritenour said.
While weather and the vagaries of a tourist economy are always a wild card in town finances, Mr. Whritenour is confident that the town will begin operating in the black when the fiscal year ends on June 30.
“If we only collect in June, what we collected last June, and let’s hope we get some weather here to help us do that, we’ll meet that goal,” Mr. Whritenour said. “We track these numbers all year long. We really know, at this point, having seen the trends all year, where things are heading.”
Oak Bluffs has operated with a free cash deficit since 2009. In 2010, the Massachusetts Department of Revenue certified the free cash deficit at $913,021. In municipal accounting, free cash is roughly equivalent to the family checking account. It is the money left over at the end of the fiscal year, after the town pays all its bills.
Selectmen credited Mr. Whritenour and the town’s financial team for the turnaround.
“When you have someone who clearly sees what the historic problem was, and is able to remedy it so quickly, it’s amazing,” selectman Kathy Burton said. “It’s like anybody’s personal budget. If you are realistic with estimates of your expenditures, you can afford to pay your bills.”
Running a deficit left the town with few options for unexpected expenses. As a result, the town has dipped into its stabilization, or rainy day, fund.
At Tuesday’s meeting, the board of selectmen took steps to establish a policy for the stabilization fund. They approved a recommendation of the finance and advisory committee to keep a reserve equal to five percent of the town’s operating budget, and set a schedule of annual appropriations to replenish the stabilization fund if it falls below that level.
The fund balance is currently $786,693. The town’s operating budget for the current year is $24.5 million. Under the new policy, the target for the stabilization fund is $1.2 million.