ORLEANS — April is proving to be the cruelest month when it comes to town finances.
Department heads were asked to reduce spending through June 30, the end of the fiscal year, to ensure a reserve of about half a million dollars to balance an anticipated drop in revenues from local receipts related to the effects of the pandemic.
In a letter to finance committee chairman Lynn Bruneau, Finance Director Cathy Doane noted areas where revenue projections were likely to fall short: meals taxes, building permits and other town fees, and penalties and interest on late tax payments. “In addition,” she wrote, “with the uncertainty surrounding the opening of the beach for the summer, we have suspended the sale of beach stickers at this time,” though not the processing of free stickers for residents.
There was some good news as well. “Motor vehicle excise tax payments and transfer station sticker sales are strong and expected to come in on target,” Doane wrote.
The reduction in local receipts “will negatively impact our year-end free cash position and, as a result, could put pressure on our ability to meet our financial reserves policy,” Doane noted. “As you know, the town’s reserve policy relies on free cash in order to meet the 5 percent reserve required of the town’s prior year adopted operating budget… I don’t foresee having much free cash for any other purpose other than to meet our reserve policy.”
Maintaining that reserve “is important because it impacts our credit rating and hence the ability to borrow money for future projects at attractive interest rates,” Doane wrote. “Right now, it is uncertain as to how the rating agencies are going to view our credit rating considering the new COVID 19 crisis. They have already downgraded their outlook for the public finance sector in general to 'negative' given the uncertainty of the impact of the crisis on state aid and local receipts.”
By limiting spending through June to “critical and essential” expenditures, “I think we’re covered for this fiscal year,” Doane told the board of selectmen April 15. She gave a “shout-out to all department heads” who identified expenses to forgo. Given the pandemic, she said, “the emergency response departments could not contribute as much as some other departments. Some that could went above and beyond what was asked for.” Doane said she’s keeping track of COVID-19-related expenses in hopes of eventual state and federal reimbursement.
Federal funds could play a role in the town’s biggest pending project, the downtown sewer system and treatment plant. Selectman Kevin Galligan recalled that when the national government provided infrastructure funds during the recession of 2008, the timing was great for Chatham, “which was the only town on the Cape ready enough to apply for one of these grants” for its sewer project.
Town Administrator John Kelly said the Cape Cod Commission last week gave towns “all of 24 hours to come up with shovel-ready capital projects to assemble countywide for submission in the event funding is available. I applied for the $48 million for the sewer system. We jumped right on it. It’s the most shovel-ready project this town will ever see… We’re at the top of the list. If that money becomes available, we should be reimbursed some of the cost of that project.”
Last night (April 22), the selectmen were expected to vote on a $39,340,445 operating budget for the fiscal year beginning July 1. It includes two new positions of 19 hours each—a part-time media technician for $18,000 and a part-time housing coordinator for $35,000—which the board decided last week to place in the budget. (Cecil Newcomb was opposed.)
The two positions were the only additional funding items recommend by Town Administrator John Kelly. He said the media tech job would “combine three per diem slots we have trouble filling and allow continuity in scheduling and taping” meetings. “The cost gets paid out of cable television revenues. There’s not a direct impact on the tax rate.”
Newcomb questioned the timing of hiring a housing coordinator to work with Director of Planning and Community Development George Meservey, the affordable housing committee, and the affordable housing trust. “I think we should hold off on that until the fall (town meeting),” he said. “Earlier in the session, we talked about the possibility of laying people off. I don’t think we should be hiring at the moment, other than the video (job) because you need that person more than anybody right now.”
“If we even waited six months (until a fall town meeting), we would lose momentum,” Galligan said. “We’ve got an affordable housing trust with dedicated funds… We have said as a board that (housing) is our number one priority.”
“My concern is that we may be seeing a change in what happens on the Cape with our tourism-based industry and what happens if nobody comes,” Selectmen Chairman Mark Mathison said. “We need to look at this opportunity. Other towns through the Cape are doing a lot of things above and beyond what we’re able to do only because we’re new and just getting organized and don’t have this kind of person in town hall who can help orchestrate this… We need to be looking at local people living here and contributing to the local economy.”