Oak Bluffs facing $500,000 budget shorts
Just six weeks into fiscal year 2010, Oak Bluffs is facing a $500,000 budget deficit, a shortfall that will likely mean the layoff of five town employees and could lead to further reductions in school department personnel.
"We're going to have to go back to a special town meeting to get us to a balanced budget," town administrator Michael Dutton told a gathering of 20 town officials, including members of the financial advisory committee, personnel board, school committee, and school administration on Thursday afternoon, August 13. "That's going to necessitate difficult decisions concerning staff."
Mr. Dutton said the timing of a special town meeting, and the need to certify the town's tax rate, means town employees could be notified of any layoffs during the last week of August, and the layoffs would take effect in early September.
"I'm pretty far down the road on what recommendation I'll make to the board of selectmen," Mr. Dutton said. "Implementation will be difficult, it will be rocky. We're going to have to do things differently. Staff is going to be retrained. In the financial areas, we've been cross training for a while. The changes that we may make aren't going to require any kind of union consent, but I certainly wouldn't be doing things without the department heads, and the people they represent, knowing about it."
While a date has not been determined, Mr. Dutton said he has been aiming at a September 22 special town meeting. Some among the group were somewhat skeptical that necessary decisions and notices can be accomplished in time for that date. The town meeting would have to be completed by the end of October for the town to meet its tax and auditing deadlines, according to finance director Paul Manzi.
Cuts are needed because revenue projections used to compute the town budget authorized by the town meeting last April are being revised downward. Mr. Dutton projected that town revenue will decrease substantially over last year, including a reduction of $1.3 million in state education funds, and $2.5 million in local receipts, which include harbor revenue, licenses, fees, and other sources. He estimated that revenue from property taxes will rise $487,533, or 3.2 percent. That figure comes from the 2.5-percent increase allowed under the Proposition 2.5 tax limiting law, and new building growth that adds property to the tax rolls.
The meeting participants reached consensus on Mr. Dutton's proposal to cut town spending by $300,165, and cut school spending by $199,835, to make up the $500,000 shortfall. That formula follows the approximately 60-40 ratio of spending accounted for by the town and the school, after fixed costs such as interest on debt, insurance, employee benefits, and assessments from the Martha's Vineyard Regional High School, The Martha's Vineyard Commission, and Dukes County, are taken out.
In a phone conversation with The Times on Friday, school committee chairman Priscilla Sylvia said the school committee, anticipating a shortfall, has already notified two full-time assistant teachers they will not be rehired for the coming school year. She said the school advisory council, will meet soon to decide whether further personnel cuts will be necessary.
"We have not determined where it will come from," Ms. Sylvia said. "We have to deal with the union. We can't take any action on layoffs until after town meeting would make cuts. It's complicated, detestable, but necessary. We're going to do the best we can."
Overdrawn for 2009
Mr. Dutton also told the gathering that the town closed its books on fiscal year 2009 with a deficit. While adjustments are still being made, he estimated the deficit is between $200,000 and $300,000, despite about $300,000 in cuts to authorized spending late in the fiscal year.
"We know we're ending in negative free cash, and that means we're overdrawn," Mr. Dutton said. "If we were a business, it would mean we ended the year with a net loss. Our job in 2010 is to end up the year with enough revenue to make up for that loss."
Oak Bluffs officials do not expect the negative free cash figure to affect the town's bond ratings. "This is a big deal for us. It's been a long time since we closed with negative free cash. But from a statewide perspective, we're still pretty darn good." He noted that the town of Natick, which holds the highest bond rating possible, finished the fiscal year with a $3 to $4 million deficit in free cash. He said a number of towns have dipped into reserve funds to make up their shortfalls. "That's a bad, bad, bad thing to do," Mr. Dutton said. He said the town's efforts to generate non-tax revenue have put it in a better financial position than many others, but the difficulty in forecasting non-tax revenue makes it more difficult to budget accurately.
"We've done a really good job of generating non-tax revenue," Mr. Dutton said. "About 16 percent of our budget is funded through local receipts, and about 77 percent through real estate taxes. We've sort of been a victim of our own success. Other towns that rely on their property taxes, they know exactly how much they're going to raise. We're a little more challenged in trying to guess local receipts.
Mr. Dutton said he is proposing a reorganization of town government, in order to make operations more efficient, while still trying to deliver the same level of service. He outlined in general terms four areas of town government that would see change. He proposed creating a licensing and permitting department, to handle everything from shellfish licenses to business permits in one central location. He would also consolidate several town government functions into a natural resources department. "Given the importance this town places on its natural resources, I think we can do a better job of staffing it," he said.
Mr. Dutton also proposed creating a planning and development department, and a finance and budgeting department. "We've got a very lean finance area, hopefully it's not going to get any leaner," he said.
The town manager also advised the group to consider all options in looking ahead to fiscal year 2011. "By the end of 2010, I think we'll be cut right to the core with personnel," Mr. Dutton said. "I don't think we'll be able to cut any more personnel without cutting services." He said the town should examine consolidating operations with the Oak Bluffs water district, and reassess the cost of trash pickup, which currently costs the town about $110,000 more than it earns from the sale of garbage stickers.
Mr. Dutton also made a forceful recommendation to consider regionalization of services with other towns, including assessing, libraries, police, water departments. He also suggested consideration of a regional elementary school district. "Now the rubber is hitting the road," Mr. Dutton said. "I know it's the 'R' word, but honestly, we've got to get over ourselves."