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Photo Vincent Guadazno
Gary Delius, chair of the finance committee, said FY ’08 budget deliberations were very different this year than in the past. |
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Banner file photo
Alix Heilala, municipal finance director, found financial irregularities in the way sewer users were charged for town services. |
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Budget woes divide town
By Pru Sowers
Banner Staff
PROVINCETOWN — Whose fault is it that voters rebelled at the ballot box last week, refusing to accept budget overrides that would have increased their taxes? Unless new sources of funding can be found — and the only way to do that at this point is to hold another special election within 90 days and hope voters change their minds — the town is facing personnel layoffs, service reductions or a combination of both.
“It’s only the tip of the iceberg,” Selectman Lynne Davies said about the financial crunch that has come home to roost. “As we get into budget time [this year] we’re going to have to make some hard decisions.”
“People are really angry,” said Gary Delius, chair of the finance committee. “Angry at the former town manager and the former board of selectmen and angry that it looks like Town Hall is not listening. People have a lot of expenses in their lives, and Town Hall is shoveling more on them. But Town Hall has the same expenses.”
Monday morning quarterbacking of something as complex as an $18 million municipal budget is not easy. The impact of budget decisions made over the past 15 years is just now coming to the surface. And soaring energy and health insurance costs have eaten into some of the wiggle room municipalities across the state had before they hit the tax levy limit set by Proposition 2 1/2.
But how much of the sticker shock Provincetown taxpayers are feeling is the result of rising costs, and how much can be attributed to past fiscal management decisions that now have to be cleaned up? State Rep. Sarah Peake, a Provincetown taxpayer, may have succinctly summed it up at Special Town Meeting Nov. 5 when she came to the microphone and thanked the new town manager, Sharon Lynn, and the finance committee.
“I commend you for setting our financial house in order,” she said, adding, “There may be an ‘ouch’ associated with it.”
Few predicted how negatively voters would react to the “ouch.” Although the town’s bond rating is solid and there is no imminent fiscal crisis, the town now faces some difficult decisions over how it will pay to live and how much that cost of living needs to be reduced in order to placate taxpayers.
Confluence of fiscal decisions
Interviews with numerous town officials seem to indicate that a perfect storm of fiscal management decisions, both deliberate and random, came together this fall to create “the budget mess,” as many are calling it. It began with the implementation of Proposition 2 1/2 itself in 1982, when the state Legislature enacted a law limiting the amount of revenue a town could raise, or levy, from local property taxes to fund municipal operations. That levy limit was held to 2.5 percent a year. If a town needed more money than that, it had to ask voters to approve an override.
Provincetown’s former board of selectmen prided themselves on not needing an override until April 2006, when unexpected costs in transferring the Cape End Manor nursing home to the New England Deaconess resulted in $350,000 in additional expenses. Voters approved that override, as they did a second override in the form of a debt exclusion of $500,000 to renovate Firehouse No. 2 at the 2007 Annual Town Meeting.
In hindsight, some are saying selectmen should not have been so afraid of asking for Prop. 2 1/2 overrides in the past; that small overrides, each of which then could be added into future years’ levy limits, would have helped maintain a financial pad that could have cushioned big budget hits that were yet to come.
“By not having a 2 1/2 override for many years, that lack of [building] a savings account for the town, the well is dry. We’re in bad shape,” Lynn said.
Incomplete salary negotiations
But some more recent financial management decisions also may have contributed to what seemed to voters last week like an abrupt descent into a financial black hole. The fiscal year 2008 budget process was vastly different from other years, according to Delius. The usual process for 15 years had been that the former town manager, Keith Bergman, created a budget, selectmen approved it and it was sent to the finance committee for vetting, resulting in their recommendation to voters on whether the budget should be passed.
As part of that vetting process, FinCom would normally meet with each Town Hall department head to discuss their budget proposals. For the FY 2008 budget, however, the committee only met with two or three department heads, Delius said, because Bergman refused to make them available.
“When you are told by the town manager no, what are you going to do? We were already late. We were under the gun to get it done for Town Meeting,” he said. “We feel we were duped and so were others.”
That was part of the reason FinCom was unaware that salary negotiations for some employee unions had begun but were not completed. As a result, FinCom did not know that money for the anticipated but not yet finalized union raises had not been included in the FY 2008 budget as a placeholder. Union raises were, after a $210,587 adjustment in the Wastewater Enterprise Fund, the largest component in the approximately $530,000 in budget overrides that were defeated last week.
“Should we have been looking behind the curtain to see who is there? Our purview is to look at budgets as submitted. Ask the [former board of] selectmen,” Delius said.
“It never occurred to me to set aside money for something that hadn’t been agreed to,” said former board of selectmen chair Cheryl Andrews, who headed up the board during the FY 2008 budget deliberations. “Those negotiations were not complete. It is staff’s job to bring me a budget. And staff wasn’t operating at peak. The administration was not functioning the last year the way it had the previous 15 years. We know that.”
In Bergman’s wake
Andrews said Bergman essentially checked out of the FY 2008 budget process, possibly because he knew he was leaving immediately after April Town Meeting. In addition, she said, he was sick for two weeks during the crucial final stages of the budget process and both selectmen and FinCom had to scramble to meet the deadline for submitting the budget to voters at April Town Meeting.
Bergman, who is now town manager of Littleton, did not respond to a request for comments on the FY 2008 budget process. But Delius is not the only one questioning Bergman’s management practices. Municipal Finance Director Alix Heilala said there were some unexplained financial accounting practices discovered in the Wastewater Enterprise Fund (WWEF) during an independent audit this spring. Bergman had asked for and received voter approval at the April 2007 Town Meeting to transfer $285,000 from the WWEF into the general fund to reimburse the town for indirect costs incurred when staff provided research, accounting and other services to the sewer project. That $285,000 helped plug some holes in the general fund but an audit of the WWEF found that it had been overcharged.
“A total of $148,000 was legitimate, as far as I could see. I don’t know where that [$285,000] calculation came from. But that means the general fund has to absorb the difference,” Heilala said, which added to the size of the override voters were asked to approve at the Nov. 5 Special Town Meeting.
Bergman also transferred $10,000 out of the public restroom attendant budget into an unrelated employee insurance line item, according to Department of Public Works Director David Guertin. As a result, the restrooms were closed one month early, at the end of September. However, after complaints, selectmen reopened the facilities until the normal closing date of Oct. 31. That decision added $10,000 to the supplement budget override that was defeated last week.
“It makes selectmen look stupid because we approved something and he [Bergman] yanked it out. We didn’t know about it,” said Selectman Michele Couture, who was on the previous board of selectmen.
Building dept. upheaval
Another $50,000 budget override hit was needed to pay unanticipated salary costs associated with former acting building commissioner Matt Mulvey, who was paid hourly to manage the department in the wake of the resignation by former building commissioner Doug Taylor.
“Keith didn’t know how to hire people. And because he didn’t, it’s costing us a boatload of money,” Couture said. “He didn’t handle personnel the way he should have.”
Accusations and finger-pointing aside, the bottom line is that even if estimates for union raises, sewer-related indirect costs and restroom attendants had been included in the budget that was presented to voters in April, the cost to taxpayers would be the same as it is today. But the sticker shock could have been spread out over both Annual and Special Town Meetings, Delius said, perhaps giving voters time to understand, debate and decide which, if any, of the overrides they could accept. What does seem clear is that for at least the 490 out of 2,964 people who voted last week, higher taxes are not acceptable. (Most town elections attract anywhere from 1,000 to 2,000 voters, with special town elections at 700 to 900 voters.)
“The challenge for selectmen now is either run the town on that amount of money or, if they can’t, be very clear to us why they can’t,” Andrews said. “We have a new set of circumstances.”
psowers@provincetownbanner.com
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Nov 22nd, 2007