Town Meeting

By: Christopher Kazarian
Published: 10/02/09

In a three-and-a-half-hour marathon session, Town Meeting members debated five articles in an attempt to account for a $3.1 million shortfall from the previous and current fiscal year budgets.

With prolonged debate, which was tense throughout, Town Meeting members approved Article 1, to transfer $1,058,977.35, the majority of which came from the stabilization fund and free cash, to compensate for a deficit from last year’s budget.

Although Articles 2 and 3 would have increased revenue by raising the local options taxes on meals and hotel/motels, Town Meeting members went with both the Falmouth selectmen and Falmouth Finance Committee recommendations of indefinite postponement.

They also went with the finance committee’s recommendations for reducing the current budget from $107 million to $105 million, with one small tweak: they took $5,600 from out-of-state travel from the town administrator and selectmen’s line item and put that into the stabilization fund.

Town Meeting members did not authorize an audit of the Department of Public Works to look into potential fraud and abuse as proposed in Article 5 by petitioner Marc P. Finneran, Precinct Six.

Article 6 was a housekeeping article allowing for the transfer of all funds for all previous articles Town Meeting voted on. It was approved unanimously in a voice vote.

* * *

Over the past three years, Falmouth Finance Committee Gary A. Anderson has issued stern warnings to Town Meeting members about the financial difficulties the town will face should it continue how it operates.

On Tuesday night he sent the same message again and this time Town Meeting members took it to heart, spending three and half hours scrutinizing specifics of proposals to make up shortfalls in both last year’s and this year’s fiscal year budgets that totaled just over $3 million.

They proposed increasing local options taxes on hotel/motels from four to six percent to raise additional revenues, but never did, while they were more forceful in cutting $5,600 from the travel expense for Falmouth selectmen and the town administrator accounts and put it into the stabilization fund, a move that was as much symbolic as it was economic.

Yet, when finished, the solutions proposed and enacted this week, according to Mr. Anderson, were only short-term remedies for a systemic problem that Falmouth has: “We spend more than we take in,” he said. “It is a practice which is unsustainable and not properly addressed in the recommendations for Articles 1 and 4.”

While Falmouth will have a balanced budget on paper, Mr. Anderson warned “unless we see a rapid and significant improvement in the economy and our revenue picture, which by the way I don’t foresee either happening soon, we have a continuing problem.”

Eliciting laughter, he said, what Falmouth will be doing at the Special Town Meeting this week “is similar to rearranging the deck chairs on the Titanic. It doesn’t address the problem.”

That problem is imbedded in the budget. In assessing it, he noted that expenses over the past three years have risen by $14 million, the result of debt, which accounts for 34 percent of that increase, and employee-associated costs, which accounts for 66 percent of that increase.

With the latter, he said, increases in employee benefits such as health insurance and retirement contributions constitute roughly 27 percent of those costs while salaries constitute roughly 39 percent of those costs. In terms of salaries, he noted that cost-of-living adjustments, step increases, lane changes and promotions have resulted in a 4 percent increase per year in that area.

He argued that the only way to fix the structural problem inherent in Falmouth’s budget is to either reduce the number of employees or alter how they are compensated, both in terms of salaries and benefits.

Because the town is limited in how much it can raise taxes, 2 1/2 percent, in any given year, he recommended immediately altering Falmouth’s course of operations. First, he said, hiring practices must be closely monitored so that only those positions necessary to public safety or creating greater efficiencies in local government be filled.

In addition, he said, the town needs to do a better job of how it tracks its revenues and expenses, doing so on a month-by-month basis, so that it can compare these figures more accurately with what it has budgeted for the year.

At the end of each fiscal quarter he said town leaders need to forecast its revenues and expenses and make corrective decisions based on those estimates to avoid a situation like Falmouth is in now. “We forecast and prepare for hurricanes. Why don’t we forecast and prepare for financial storms?” he asked.

He also called for accountability of department heads, elected officials, and Town Manager Robert L. Whritenour Jr. and Assistant Town Manager Heather B. Harper and urged residents to demand they act now.

If selectmen do not take this imperative to Mr. Whritenour, he said, they will put the town’s financial and economic stability at risk while jeopardizing the faith that residents have in their ability to provide leadership.

Yet, he stressed that residents have a role in conveying this message to town officials. “If we are not outspoken about these sorely needed changes, the only other alternative is to increase our taxes and continue the status quo,” he said.

Tough decisions, he said, need to be made now because “our financial clock has run out of time,” a reference to the numerals “00:00:00” emblazoned on the wall as a part of his PowerPoint presentation. “There can be no more delays,” he warned. “Our town is in critical condition.”

Although his message was dire, several Town Meeting members chastised the finance committee for providing its recommendations on its specific budget cuts that night.

Leslie R. Lichtenstein, Precinct Eight, was upset that this was the first any Town Meeting members had seen of these figures. “The community of Falmouth didn’t elect a rubber stamp Town Meeting,” she said. “We can’t ask questions if we don’t get the data [beforehand].”

“I have never seen a Town Meeting with so few articles with so many people asking me so many questions,” Joseph A. Netto III, Precinct Nine, added.

He, too, was critical of the lack of information received before Tuesday night and said it “completely destroyed my faith in this process.”

He wondered who was responsible for having the Department of Revenue pre-approve the town’s budget projections for expenses and revenues, an affirmation that Mr. Anderson said the finance committee needed before it could make its recommendations. Because that certification came in so late, Mr. Anderson said, the finance committee was delayed.

Mr. Whritenour accepted responsibility for the delay, but said what the town was asking from the state was unusual as it was not a certification, but a tentative approval. “We asked them to create a new process,” he said, based upon the fact that revenues for the last fiscal year were below what was budgeted.

Even with that answer, Mr. Netto was not satisfied, arguing that if Town Meeting members had details just a few days earlier it would have been more palatable than what they were faced with on Tuesday.

In order to make up the roughly $1 million deficit incurred last year, the finance committee recommended tapping into $800,000 in rainy day funds, $500,000 of which will come from the stabilization fund. The majority of the remaining money would come from leftover funds in a variety of capital budgets approved at Fall Town Meetings in 2008, 2007, 2005, and 2003, including a little over $31,000 for Department of Public Works bridge projects as well as $35,000 for DPW sidewalk projects.

Mr. Netto questioned tapping the stabilization fund and whether taking more money from that would impact the town’s goal of having this equal five percent of the town’s operating budget.

Mr. Whritenour admitted this was a long-term goal for the town and that no free cash would be used to support the operating budgets for Fiscal Year 2010 or 2011.

In response, Mr. Netto chastised the town for “being reactionary and not being proactive.” In hindsight, he said, he would probably question some of the votes he made at Town Meeting during the past three years. “We are all too blame,” he said.

Along those lines, several Town Meeting members took a more active stance, dissecting the proposals intended to compensate for the shortfall in last year’s budget, with some like Linda H. Tobey, Precinct Four, wondering why small amounts, including a $320.74 transfer from the November 2007 capital budget for an Information Technology police server and a $155.76 transfer from the capital budget for a GIS equipment upgrade, were being recommended.

She preferred using the roughly $14,000 in out-of-state travel money in this year’s budget to cover the shortfall.

However, Mr. Anderson said, his committee worked closely with all the town’s department heads in reducing this year’s budget by $2.1 million while coming up with alternative solutions for the $1 million needed for last year’s budget. “What we wanted to do is go along with their recommendations rather than playing God, if you will,” he said.

One concern James E. Fox, Precinct Two, had was that the nearly 70 percent of the town’s revenues comes from property taxes. He wondered what would happen to that revenue if property values decline.

Town Assessor David A. Bailey said this would not matter as Town Meeting sets the budget so that if property values slide the tax rate would go up.

Robert W. Donahue, Precinct Three, was critical of town officials complaining and the process for reducing the budgets, saying “You guys are all tying our hands behind our backs and I hope you are happy with it.”

Although Town Meeting members ultimately voted with the finance committee’s recommendation for Article 1, Richard K. Latimer, Precinct Two, served notice to Town Moderator David T. Vieira that he was making a motion to reconsider the vote. That gave Town Meeting members 30 minutes to reconsider the vote, which it never did.

Article 2, which would have increased the local options tax on meals by .75 percent, received no discussion as Town Meeting members voted indefinite postponement.

Its counterpart, Article 3, however was debated in depth, as Town Meeting members argued the merits of raising the local options tax on hotel/motels from four to six percent.

Edward H. Schmitt, Precinct Eight, made the first plea to approve this article as he argued that this would be a tax not on residents, but on visitors to Falmouth. These are visitors, he said, who use town services, from trash removal to receiving assistance from public safety officials to using its beaches.

It costs money for these services, he said, something that a slight increase in taxes could help pay for while barely being noticed by tourists, if at all. “I think it is fair, very fair to ask them to pay a little bit more,” he said.

The alternative, he said, is to cut services, which would impact tourism. And if tourism is the town’s number one business, he said, Town Meeting members need to recognize “it costs money to maintain this business.”

The finance committee did not support raising this tax, Mr. Anderson said, because it would put Falmouth at a competitive disadvantage to all the other towns on the Cape that have not raised theirs. If the tax was raised, he noted that in its entirety it would go up to roughly 11.7 percent.

That would generate roughly $331,000 in additional money a year.

Kevin E. Murphy, Precinct Five, said this is a heavy price to pay for little reward. Already, he said, owners of local bed and breakfasts, hotels and motels are making sacrifices by not raising prices in this tough economy. It is an economy, he said, that has impacted everyone’s bottom line.

He asked Town Meeting members whether they wanted to entice tourists by having the lowest rooms and meals taxes on Cape Cod or allow a town like Hyannis to lay stake to that claim. “Going up in taxes is shortsighted,” he said. “Now is not the time to do it.”

Mr. Latimer accused Mr. Murphy of having an anti-tax theology, particularly after he complained of paying a convention tax while staying in a hotel in Boston. He said the town will not only have to tighten its belts, but raise taxes. There is no alternative, he said.

And while some touted the importance of tourism to Falmouth, Deborah Siegal, Precinct Six, downplayed that, referencing a study in which the biggest employers in Falmouth are actually the scientific institutions and Falmouth Hospital. “It is a fallacy that tourism drives this economy,” she said.

Regardless, Selectman Brent V.W. Putnam said, he did not favor raising taxes when there is still fat in the budget. “Increasing revenues makes it easy to leave sacred cows in the budget,” he said.

Milton E. Kelley Jr., Precinct Three, gave a different perspective as the owner of Green Harbor Waterfront Lodging on Acapesket. Suggesting that it is only an additional two percent, he said, that is misleading as it represents a 50 percent increase in the local options tax.

This would hurt local bed and breakfasts, hotels and motels, he said, because many groups traveling to the Cape look for the lowest rates. If this was raised, he said, those sales would be lost to neighboring towns. And if it did go up over 11 percent, Falmouth’s taxes would be as high as many city rates.

As far as his guests utilizing town services, he said, at least with trash, he foots that bill just as many similar businesses do.

In hearing these arguments Selectman Carey M. Murphy admitted this was a difficult way to construct the budget. He said residents need to take a long, hard look at changing the way the town operates, including seriously considering privatizing some of its services.

“We are in a financial meltdown, the consequences of which we haven’t seen in a while,” he said. It is likely to continue, he said, as unemployment rates have not yet risen.

In a strong voice vote Town Meeting members ultimately shot Article 3 down before it began to debate the recommended cuts to the current budget in Article 4.

A lot of that debate centered around out-of-state travel, a cut that that Mr. Netto proposed.

In this area, Mr. Whritenour conceded that he would allow $5,600 to be taken from his travel expenses as the remainder of it, $3,500, had been used to send him and Ms. Harper to Montreal for the International City Management Association annual conference last month.

Mr. Netto asked Falmouth Police Chief Anthony J. Riello and Falmouth Fire Chief Paul D. Brodeur about their out-of-state travel expenses and both said these were necessary items.

Chief Brodeur was passionate, saying that he has already reduced his budget this year by $200,000. If it has to go down any further, he said, some of his staff will be out of work.

“These are your neighbors who pay mortgages, buy food and bring their relatives to stay at bed and breakfasts to town,” he said.

If Town Meeting members wanted to “nickel and dime these numbers when I already gave you three percent of my budget and I am losing two people when it has taken 13 years to get six,” then that was their prerogative, he said.

It was a tense moment in an overall tense night that was briefly lightened when Robert V. Antonucci, Precinct Six, joked that “this is probably the most painful experience I’ve had except for being on the high school building committee,” in reference to the board that has overseen the over-budget and oft-delayed $86 million high school renovation.

He called on Town Meeting to go with the recommendations given them and to trust the finance committee and town officials. “We will be here until midnight unless we move this along,” he said.

Before they voted in favor of the recommendations for Article 4, Ms. Lichtenstein made a suggestion they put the $5,600 from the town administrator’s out-of-state travel into the stabilization fund. “It’s time we start putting something back into the piggy bank instead of taking it all out,” she said.
Town Meeting members agreed with this proposal in a voice vote shortly before voting in favor of Article 4.

Marc P. Finneran, Precinct Six, was the petitioner behind Article 5, the last to generate discussion on Town Meeting floor. The article asked for an audit of the DPW to investigate potential abuses of fraud or waste.

If Falmouth were a corporation, operating with its $110 million budget, he argued that it would be compelled to audit a $30 million branch, in reference to the DPW, of the company.

Mentioning the high school renovation, he said, there is a need for the town to look at how it operates.

While the town does audit its town departments, he said, those are merely cursory and do not look in depth at branches of local government. He said this would be beneficial to determine if the DPW is operating efficiently.

In at least one instance, he questioned where DPW money has been spent, referring to $200,00 that was approved by taxpayers as part of a $1.9 million debt exclusion passed in the 2008 May election. That money was intended to upgrade the town’s waste management facility, but the work has yet to be done, Mr. Finneran said.

Throughout his presentation, Mr. Murphy interrupted Mr. Finneran, requesting to call the vote. Each time he was shot down by Mr. Vieira.

Ultimately, Town Meeting members voted against the audit and filed out of the Lawrence School auditorium at 10:30 PM, after three and a half hours of grueling debate.