Oak Bluffs budget is more than $1 million in the red - where to get it?
Oak Bluffs is facing a budget shortfall of more than $1 million for the next fiscal year, in what town administrator Michael Dutton calls "a perfect storm" of reduced revenues and rising expenses. The shortfall represents the difference between what town departments have requested, and the projected revenues for next year.
At Tuesday's regular selectmen's meeting, Mr. Dutton issued a stern assessment of the looming budget dilemma. "The finance committee (FinCom) has asked that I come up with a plan to begin to substantially reduce expenses, and look for any opportunity for revenue growth," he said.
Finance committee (FinCom) members were advised last week that the recent trend of revenue growth amounting to approximately four percent annually is projected to slow to approximately 2.4 percent in the next year.
"This is something of bombshell for people," said selectman chairman Kerry Scott.
Mr. Dutton said a significant slowdown in new growth, including single-family homes, commercial property, and large additions will have an impact on tax revenue. He also said the revenue from automobile excise taxes will be significantly reduced.
Mr. Dutton says the town is also facing significant increases on the expense side of the balance sheet. "We're looking at insurance increases," he said. "The same problem associated with insuring all our homes for hazard insurance, the town pays it as well. We're looking at increases in the highway department to take care of the buildings we have. Health insurance rates continue to incline. We're looking at about a 10- to 12-percent increase. Our county retirement assessment has gone up significantly."
Adding to the problems is a recently completed compensation and classification study that, if implemented, would mean raises for town employees who fall well below the average wages paid to people who do comparable jobs in similar towns.
"My hope and my expectation would be that we will do our best to bring those employees who don't fall into the ranges on the classification and compensation study into the ranges," Mr. Dutton said. "Of all our commitments I think that's probably going to be the most important."
The town is also waiting to hear how much it will owe toward funding the Martha's Vineyard Regional High School next year. Any increase over last year's assessment could significantly widen the budget shortfall, described by town finance director Paul Manzi as "more than $1 million."
Looming over the entire budget process is an unfunded liability for town employee retirement benefits.
Oak Bluffs has been advised it should set aside approximately $600,000 for unfunded retirement benefits. That amount is in addition to the projected budget shortfall. It is a preliminary estimate of an initial payment to cover unfunded liabilities, and it is still undetermined when the town will be required to pay it.
"We are trying to figure out at what point we are going to have to fund that, and at what cost the state will require us, and whether or not it makes financial sense for us to really bite the bullet before we're mandated to fund it," said Mr. Dutton.
The unfunded liability issue is one faced by nearly every town in the Commonwealth. "The town is obligated to fund unfunded accrued liability for health care for retirees," said selectman Ron DiOrio. "We are obligated to do that. The earlier you do it, the cheaper it will be. We can delay, and make a lot of retired people who are counting on their health care nervous, or we can bite the bullet."
Selectman Roger Wey suggested tapping the town's stabilization fund, essentially a rainy day savings account, to pay for all or part of the unfunded liability. "We certainly don't have money in our budget, to come up with anything close to what we need," he said.
With difficult budget decisions ahead, selectmen are looking for ways to increase town revenue. One issue they will explore is whether to negotiate with the Martha's Vineyard Hospital, located in the town of Oak Bluffs, for payments in lieu of taxes.
Mr. DiOrio presented a copy of such an agreement between Massachusetts General Hospital and the city of Boston. Mass General paid $1.5 million in lieu of taxes last year.
On March 1, 2007, Martha's Vineyard Hospital officially became an affiliate of the Massachusetts General Hospital and a member of Partners HealthCare.
Ms. Scott appointed a delegation, headed by Mr. DiOrio, to meet with Massachusetts General Hospital administrators in Boston.
"We've got to get people looking at this, and start to recognize, that having that facility within our borders, takes substantial property, waterfront property, off the tax rolls," Mr. DiOrio said.
Tim Sweet, vice-chairman of the Martha's Vineyard Hospital board of directors, said there are important distinctions between the situation on the Island and the agreement between Mass General and Boston.
"You have to remember that we're not Massachusetts General Hospital, we're still Martha's Vineyard Hospital," said Mr. Sweet. "While we're under the Partners umbrella, were still an Island hospital, and an Island charity. It would not be a Mass General decision.
"I do think we're an asset to the town in many ways. The town handles all of the ambulance service for the hospital. I think that ends up being a substantial amount, annually. That's tangible, and measurable."
During the last fiscal year, the Oak Bluffs ambulance reserve fund received $721,708 for ambulance services, according to the town treasurer. A significant amount of that total came from ambulance transport initiated by the hospital.
Mr. Sweet says any move to negotiate payments in lieu of taxes should include all organizations exempt from paying taxes. "It's a little bit of a Pandora's box you open," he said. "I m not sure you could separate them, treat them differently. In fairness it needs to be looked at as a whole."
Selectmen voted to take under advisement two business matters.
The first was a transfer of a license to rent six cars and 50 mopeds. The business is currently owned by Cheryl King, and operates as King Rentals on Circuit Avenue Extension. She wants to sell the business to Jason Leone, who currently operates Island Hoppers, a moped and car rental business in Vineyard Haven.
Selectmen voted to put off a vote until they can evaluate safety concerns associated with exits to the abutting movie theater. They also want to determine whether the board can negotiate a reduction in the number of moped licenses.
The second business matter involves a request for street permits from Vineyard Green Tours, represented by Vernon Welch and James Sanfilippo. The company wants to operate bio-diesel powered buses from the Steamship Authority terminal in Oak Bluffs to Aquinnah. The selectmen delayed any action until the company gathers more information about where the buses will be staged and parked, and what routes they will use.
In other action, the selectmen announced plans to open additional areas of Sengekontacket Pond to shellfishing. Usually, areas designated as sections 2, 3, 6, and 7 are closed during the winter and reserved for summer use.
But last year, the state's Division of Marine Fisheries reclassified the saltwater pond as a "conditionally approved area." Under that classification shellfishing is only allowed from October 1 to May 31.
Since those areas can't be opened in the summer, the town has decided to open them on January 19, pending a water quality test.