Reserves Keep Harwich In Good Financial Shape

 HARWICH – The town’s financial picture is looking very good heading into fiscal 2026, Town Administrator Joseph Power said while presenting a daft budget to the select board last week.
 “It’s a testament to everybody in this room and town meeting,” Powers said in the board’s Feb. 3 meeting. 
 However, there were words of caution from Powers as he looked to the future.
 “While we have strong reserves and a stable outlook in terms of our finances locally, and we expect a relatively stable economy over the coming months, we need to be wary of the future if effects to the state and national outlook begin to erode as early as the middle of 2026,” said Powers. “Present variables and some fixed and semi-fixed costs for 2026 can be classified as potential weaknesses.”
Nonetheless, he added that the outlook for 2026 “appears solid with the potential for less stability in 2027.” The town has the capacity to meet its financial commitments given its AAA bond rating and available revenue resources, he said.
 The financial reserve strengths are attributed to the town’s stabilization funds. The general purpose stabilization fund ended fiscal 2024 with $6,097,504; the special purpose stabilization funds for affordable housing had $2,204,548; and the wastewater fund contained $1,704,548. The town’s Other Post Employment Benefits (OPEB) fund has $6,317,436. 
The general purpose stabilization fund and OPEB have been supplemented in recent years with $500,000 going into each account annually via a town meeting vote. The special purpose stabilization funds come from room tax revenue.
Two weeks ago the town received its free cash certification of $5,821,439, which is 7.11 percent of the 2024 annual operating budget. When free cash is added to the stabilization funds, close to 15 percent of the general operating budget is in reserve. The 15 percent mark is a high-end recommendation for municipality reserves, according to the state Division of Local Services.
Because of the healthy reserves, Powers recommended the board not place $500,000 in the general purpose stabilization fund in the upcoming annual town meeting.   
Resident Jeffrey Lang asked why the town does not consider cutting free cash by reducing the room tax from 14 to 13 percent.
“You continue to operate with excessive money that you continue to spend, instead of reducing revenues,” said Lang.
Powers presented a preliminary balanced budget of $83,385,598, a 5.4 percent increase over the current year. Revenue sources last year increased by 5.9 percent with a 3.3 percent increase from the tax levy, 3.43 percent forecast in growth revenues, and a 12.76 percent increase from other sources. Powers estimated, based on the budget proposal, that there would be a surplus of just under $500,000 once spending obligations are met.
Powers said the budget provides level services, which was called for in the select board’s budget message issued in October. He said there were requests from departments for enhanced services which were not included. Those requests included a deputy department of public works director; a sergeant position in the police department; a health and human services position; and an IT professional. The total cost of filling those positions would be $479,475.
“I’m not saying they are not valid,” Powers said. “On the contrary. As we discuss this going forward there might be one or two, or perhaps we can accommodate all of them.”
Education assessments are adding to the increase in the proposed budget. Together, Monomoy Regional School District (MRSD) and Cape Cod Regional Technical High School are seeking a 7.28 percent increase, primarily driven by the MRSD budget, which proposes an 8.07 percent increase. The Cape Tech budget seeks a 3.43 percent decrease over the previous year, the result of fewer students attending the school from Harwich.
Powers made it clear that the education assessments are draft numbers and will be subject to additional discussions. The MRSD figure right now is $32,288,091, and the Cape Tech number is $2,129,192.   
The capital outlay plan seeks $9,827,149 for 17 projects. Powers said the funding sources are all available. 
The town’s debt service is $118.5 million, which includes debt related to the phase three sewing project in East Harwich. The state’s allowable capacity is double that amount, said Powers.
Cautioning that the commonwealth’s revenues may not be where they have been in the past few years, he issued what he termed a SWOT assessment — Strengths, Weaknesses, Opportunities and Threats. The strengths are strong reserves and a stable outlook; weaknesses include variables in fixed cost increases; opportunities include a warning that stronger headwinds may prevail in fiscal 2027, so the best time for the community may be now; and threats include national and state economic uncertainties that could impact the local economy.