To the editor:
On the April 8 ballot, Westport voters will find two override questions that they must consider. Question 1 is for a $500k Capital Stabilization fund to pay for the building repairs, operating system upgrades, vehicle replacement and equipment needs of the town; and Question 2 is for a town-wide operating budget override of $949,465 (roughly split between town and schools). Westport voters have historically shot down overrides, usually by substantial margins. So what is different this time? Why can’t the town live within the 2.5% increase that it gets every year? These are good questions.
It is true that Proposition 2½ allows the cities and towns to raise their real estate tax levy every year by a maximum of 2½%. And let’s face it, we always raise it the maximum 2½%. A small point here is that the 2½% is based on the two thirds of our $32 million total budget that is derived from real estate taxes. The other third of our budget is funded by local receipts (excise taxes, fees, etc.) and state “aid,” formerly called revenue sharing. So the guaranteed 2½% is really 1.7% of the total budget. Local receipts usually go up but have shrunk in recession years and state aid has been reduced by nearly half a million dollars ($6.3 million in 2009 and $5.8 million in 2014). All said and done, we are still talking about roughly 2% per year after adding in new growth in town (new homes or businesses added to the tax rolls) as long as we are not in a recession.
A significant part of the increase in our budget each year has been the moneys left over from the prior fiscal year — ‘free cash.’ An unfortunate moniker, but it means that the leftover funds from fiscal 2013 say, are certified by the state to be correct sometime in fiscal 2014 and, “free” to be spent in fiscal 2015. The problem for Westport is that we have pretty consistently relied on these one-time funds to augment the operating budget.
Why is free cash considered one-time funds and what is the problem with spending it on operating expenses? State guidelines on municipal finance require that a conservative approach be taken to budgeting so it is pretty unlikely that a town would end up with a deficit or negative free cash. But the level of free cash cannot be predicted. It might be $200,000 one year and $1,500,000 the next. The analogy for free cash in an individual household would be bonus or overtime money that cannot be counted on every year. Clearly it would be foolish to build a household budget based on one’s overtime from a particularly good year. Well this is exactly what Westport has done for the past several years. If we don’t get the same “bonus” every year, we have to make cuts.
The answer here is to use one-time funds for one-time expenses such as capital improvements and to base the operating budgets off of predictable revenue sources. This is exactly the program that the current Board of Selectman has attempted to implement. This year’s free cash (certified from FY13) is slated for long neglected capital needs such as Highway Dept. trucks and a School well among other things. Not everybody is happy about this but it is good policy. We have done a poor job taking care of our buildings and we have stretched to the limit the lifespan of much of our equipment. This is the first time in memory that we have assembled a long term capital plan to address these very issues. Question #1 begins to fund this long term plan.
This board has taken several other measures to improve the fiscal health of the town. This includes developing a balanced budget in a timely fashion and implementing a formal purchase order system to properly track expenses. We are also working with the School Department to determine the best way to consolidate buildings and are considering the sale of unnecessary buildings (note Question 5 regarding this very subject on the ballot as well).
So this being the first year of the new free cash policy makes for a problem. It is a transition year where we begin diverting one-time funds that might have otherwise gone to operating expenses. Next year, we could expect to get back to a 2% increment in spending which we should be able to live with.
Some have argued that town government is wasteful and inefficient and therefore we should deny all requests for additional revenues. But this can be said of any governmental organization, particularly as you go up the ladder to the state and federal levels. We actually have a pretty lean operation here in Westport when compared to other towns and this is evident with our favorable tax rate. This is in no small part due to the watchful eyes of many concerned individual tax payers and organizations. I make this appeal to those who would normally not give consideration to an override. The Board of Selectman as well as the Finance Committee have backed these requests as part of an overall plan to change the way we do business. For this reason, we ask your help in continuing our efforts to put the Town in good fiscal straights by voting yes on questions 1 and 2.
R. Michael Sullivan
Member, Board of Selectmen