CHATHAM — Facing the possibility that all sorts of fee and tax revenue will be down because of the COVID-19 emergency, town officials are preparing an austere budget plan for fiscal 2021.
Finance Director Alix Heilala told selectmen Monday that she and Town Manager Jill Goldsmith are making contingency plans in case available revenue declines to 75 percent or even half of the current year’s local receipts.
“Hotels are closed,” Heilala said, and restaurants have either closed or scaled back to take-out service. Thus, lodging rooms tax and meals tax revenues are likely to be down, she said. And with people less likely to buy new cars during an economic downturn, excise tax numbers will also likely decline, she noted. “We don’t know what our recreation programs will be for the summer,” Heilala added, and beach parking receipts could also decline substantially, depending on how long the virus emergency lasts.
The current fiscal year, which ends in June, remains financially solid, she said. Tax bills were just mailed, and the first week’s receipts were strong. About 80 percent of the anticipated revenue for FY2020 is in at this point, Heilala noted. It is FY21 that has town officials concerned.
Goldsmith’s proposed budget for the next fiscal year calls for $7,007,349 in local receipts, a figure that conservatively represents 80 percent of the current year’s estimated receipts. If that figure drops to 75 percent, revenue will drop by about $811,000. If revenues are just half of the current year’s figures, town coffers would suffer a $2.8 million hit.
If necessary, the town has several potential ways to reduce expenses and free up funds for essential services. The proposed budget includes four full-time equivalent employees, and eliminating those positions would save $254,980. Seasonal staffing levels might also be reduced, reflecting any lower demand for services this summer. The town might be able to defer the purchase of several big-ticket items like trucks for the DPW, saving around $370,000 and conserving the town’s free cash account.
Town meeting was expected to consider a request to contribute $300,000 to the other post-employment benefits (OPEB) trust fund, half of which was to be borne by the tax levy. Deferring that contribution would save taxpayers $150,000. Voters were also set to consider creating a $1.7 million capital stabilization fund, and the funds would be saved if town meeting took no action on the article. Planned repairs to the Eldredge Public Library could be reduced to include only critical items, like fixing the leaky roof. Doing so would save an estimated $695,200, Heilala said.
The town could also opt to defer three big-ticket borrowing authorizations on the town meeting warrant: nearly $8.3 million for a new senior center, $4.5 million for stormwater improvements, and an undetermined amount for renovations at the transfer station.
To that end, Chatham has yet to announce a plan for rescheduling its annual town meeting. Orleans and Harwich have each set new dates in June, with the intent of bringing voters only essential spending items. Chatham may follow suit, deferring other expenses until a fall special town meeting.
Selectmen Chairman Shareen Davis said she recognizes the financial concerns that citizens have because of the virus.
“I think we probably will be shifting some of our priorities as we look at the next couple years,” she said.
“We need to be conservative at this point in time,” Selectman Jeffrey Dykens said. “We don’t have any history to go by here.” If it were possible to revisit the board’s recommendation on Community Preservation Act spending, Dykens said he would do so. While he supports making essential repairs at the library, he doesn’t favor moving ahead with a senior center at this town meeting.
“To go to the town at this point and ask them to fund $8.3 million for a council on aging is not wise,” he said. “I don’t think it would be met well, frankly,” he said.
Even if an annual town meeting can be held before the end of the fiscal year, the town’s fiscal outlook won’t be much clearer by then, Selectman Peter Cocolis said.
“We’ve not going to know where we are, certainly, by June,” he said.
Board member Dean Nicastro said he prefers postponing the meeting until late summer or early fall, operating under state rules that allow spending in the new fiscal year on a month-by-month basis so town meeting doesn’t have to convene to pass a budget. In late June, “where are you going to get 100 people to get together comfortably?” he asked. Some have proposed holding the session outdoors at Veterans Field.
Selectmen took no action on any of the cost-saving ideas or on rescheduling town meeting, saying they will continue to gather information before making any decisions.