FinCom Urges Hard Look At Free Cash, Water Rates, Crowell Road Intersection

CHATHAM – Will there be enough town water to serve the needs of the town in the future? Are high levels of free cash being used to circumvent town meeting? Is the proposed upgrading of the Route 28/Crowell Road intersection a waste of time and money?

Those were among the questions posed by the finance committee after its initial review of the proposed fiscal 2026 town operating budget.

“We think the financial management of the town…is beyond reproach,” chair Stephen Daniel told the select board Feb. 18. “That doesn’t mean we can’t look for little ways to do better. That’s our responsibility.”

The committee is “broadly supportive” of the draft $44.1 million budget, an 8.19 percent increase over current year’s spending, Daniel said. “We think it’s a good, intentional budget,” he said before highlighting several areas about which the committee has concerns.

Having sufficient potable water tops that list. Sufficient clean drinking water is “the egg on which our goose sits,” Daniel said, and in the recent past the town has come “too close” to the capacity of existing town wells. Water department officials have said the additional capacity that new wells would provide would not be worth the investment, he added, so the town needs to look at other ways to conserve water, including raising rates. Currently the town’s water rates are “pretty much near the bottom” among Cape towns, he said, and the fincom recommended a detailed water rate review, something the select board has also backed. 

With 90 new affordable housing units in the pipeline and a goal of some 200 more units in the next few years, “we need to ensure that the town can deliver the water required by these new residents,” the fincom wrote in a memo to the board summarizing its concerns.

The level of the town’s free cash reserves is also a priority for the fincom. Free cash is unexpended money from previous years’ budgets and also includes revenue that is higher than estimated. The Massachusetts Department of Revenue certifies free cash annually, and also recommends that it be no more than 3 to 5 percent of a community’s operating budget.

The town’s policy of having free cash at 3 to 5 percent of the town’s operating budget has only been met once in the last 10 years; this year’s $11 million in free cash is 25.3 percent of the budget, Daniel pointed out. In the past decade, free cash levels fluctuated between 5 and 20 percent. 

Such a high level of free cash is “an unnecessary burden on the taxpayers,” Daniel said. “It can facilitate the skirting of the will of town meeting…and we are just sort of flummoxed why there is no effort to try to focus on this number and try to rein it in.”

Over-funding of free cash allows officials to “partially sidestep” the need for a two-thirds vote at town meeting to borrow money for large expenditures, the committee’s memo said. That’s what officials are planning for the May 10 annual town meeting: $5 million for the expansion and renovation of the Center for Active Living and $4 million for upgrades to the transfer station will come from free cash (see story on page 5). Appropriations from free cash require only a simple majority to pass.

 “That’s something we want to take a look at,” responded Town Manager Jill Goldsmith. Select board members defended the decision to use this year’s unusually high level of free cash — the result of an accounting glitch — for the large capital projects. 

The board’s intent is not to circumvent town meeting, said board member Jeffrey Dykens. While he agreed the policy needs to be looked at, the town is in the “enviable position” to have the money available and avoid borrowing costs on the proposed capital projects.

 “It may be a problem, but it’s a high-class problem,” said chair Michael Schell. “We’d rather be long than short.”

 It would be difficult to “over-emphasize the overwhelming opposition” of the finance committee to plans to upgrade the Crowell Road/Route 28 intersection due to “what we believe to be the everlasting adverse impact we believe this project will have on the face and shape of this community’s public gateway,” Daniel said. While acknowledging concerns about the intersection expressed by the fire department, he said fincom members believe there are “materially less expensive and disruptive” ways to address the concerns. 

 “We think there’s a good middle ground there somewhere,” he said.

 Twenty-five percent designs for the project are nearing completion. Some select board members are also skeptical of the project, Schell said, but wanted to be responsive to public safety concerns and agreed to move forward because “we need something to discuss.”

 Other fincom concerns include the growth in town staff, which is up 18.4 percent over the last six years, with five new full-time equivalent positions proposed in next year’s budget; the need to increase the inspection fee for short-term rentals, which the committee unanimously voted to recommend be raised to between $100 and $150 to offset staff costs; and urged a review of the town’s budget and financial management policies.

 The fincom also expressed its continued displeasure with the lack of financial transparency from the chamber of commerce. The financial panel is “on the cusp” of recommending that the town cut off all funding to the chamber except salaries for information booth staff, Daniel said. The town’s annual $20,000 contribution to the chamber exceeds the funding contributed by chamber members, he said. 

The fincom agreed to support level funding to give the chamber’s new leadership, which he said has increased transparency this year, more time to address its concerns and recommended that the chamber consider increasing membership rates.

 “I apologize if we were a rock in anybody’s shoe,” Daniel concluded, “but that’s our job.”