WELLFLEET — The town’s free cash account won’t be certified by the state in time for Saturday’s annual town meeting because the books for fiscal 2020 and 2021 are still not closed, interim Town Administrator Charles Sumner told the select board on May 31. He repeated the news on June 2 at a session of the Wellfleet Community Forum.
With no free cash, several projects will be deferred until at least this fall. Article 14 on the warrant, to protect the town’s bond rating by replenishing the stabilization fund, will have to be pushed back to a September town meeting. Some capital projects will also wait until September: the recreation dept. bandstand repair project ($50,000), water refill station replacements ($20,000), a culvert replacement on Briar Lane ($75,000), the harbor flora and fauna study ($60,000), and revetment engineering at Keller’s Corner ($50,000).
The town has been in regular contact with the state Dept. of Revenue (DOR) as Sumner and interim accountants Lisa Souve and Mary McIsaac have worked to close the books, Sumner said.
Once the books are closed, the town’s auditors from Powers & Sullivan will take about three weeks to conduct an audit, said Sumner. He predicted that free cash certification would happen at the end of July. The money can’t be used without a town meeting vote, probably in September at the earliest.
Free cash certification was just one of several issues related to town finances that officials hoped would be sorted out before the June 11 town meeting. At the meeting, voters will be asked to approve $1.77 million in Proposition 2½ overrides to fund the operating budget, the capital budget, the hiring of two new police officers and two new firefighters, paramedics, or EMTs, and a fire suppression system at the Wellfleet Elementary School.
If the $518,820 operating budget override doesn’t pass by a two-thirds vote at town meeting and a majority vote at the June 21 town election, some services will have to be cut. An alternative “austerity” budget has been offered to deal with that situation. It proposes cuts in the preschool voucher program, swimming lessons, library hours, amnesty day at the transfer station, and other reductions.
Without the $672,700 capital budget override, repair and resurfacing of the basketball courts at Mayo Beach, bulletproof vests for police officers, replacement of portable radios for the fire dept., a DPW dump truck replacement, and technology upgrades at the library would be put off again.
“It should be apparent that we’ve had an excellent team of people doing excellent work to identify these problems, come up with the solutions to correct them, and put in place what we need going forward,” said select board member John Wolf. “If the overrides do not pass, the only people we will be hurting are ourselves.”
Sumner described a flawed budget process that preceded last year’s annual town meeting.
“It didn’t have the robust review process that is necessary,” he said. “When you look at the warrant, you’re going to see that. We have a lot of unpaid bills. We had a lot of budgetary transfers on the warrant. We have a lot of deficiencies in the current budget we’re going to have to deal with on June 11.”
McIsaac said that the finance team tracked the town’s accounts over the last five years and found limited growth in reserve balances, because those funds were being used to fund the budget. She said that was not a sound financial practice.
Wellfleet has gone from using 50 percent of its ambulance reserve funds to using 98 percent, McIsaac said, “completely depleting that reserve without the capacity to grow it back.” The same was true for beach revenues, where about a million dollars has been used every year to fund the town’s operating and capital budgets. For fiscal 2021, she said, “you left yourself with $110,000 to begin the next year. Instead of addressing the balance in your budget and considering you were getting beyond what you could afford, you were simply drawing from these buckets to backfill and balance your budget,” McIsaac said.
In a way, not having free cash certified is “a gift,” McIsaac said. “It gave the town a chance to recover from abusing the free cash balance.” Real financial stability comes from raising the levy ceiling through minimal, occasional overrides, she said.
Closing the Books
For nearly three hours on May 31, Sumner, McIsaac, and Souve discussed the findings of their 14-month effort the balance the town’s books.
They said they conducted a comprehensive review of the set-up and processing of the town’s accounting software, called Vadar, and the accuracy of records. The work was expanded to include guidance to town officials and employees and preparing the year-end reports required by the DOR to set the tax rate.
Their main finding, they said, was that thousands of expense records had been posted to the wrong accounts.
“We have lists and lists and lists with numbers and numbers and numbers of items that have been charged to the wrong place, double posted, not posted at all,” Souve said.
The review was undertaken to investigate problems revealed in the auditors’ fiscal 2020 management letter, including a $765,000 “unknown variance” in the accounts. Most of that variance has been detected in various funds, Sumner said, promising to disclose more details once the books are closed.
“There’s been some conversation to suggest we’re here because we’re looking for stolen money,” McIsaac said. “That is so far from the truth. We were brought in to fix the mistakes.”
McIsaac would not classify any of the errors or omissions as purposeful. “I think these mistakes happened because people weren’t paying attention,” she said. “They didn’t know or understand their job. They didn’t understand the accounting system. I find it difficult to walk across that line and say that people willfully ignored the direction they were supposed to take in their jobs.”
McIsaac did describe the conduct of the town’s accounting department as “negligent.”
Sumner worked with McIsaac and Souve for at least two decades in Brewster before the three came in to sort through Wellfleet’s financial woes. Souve served as Brewster’s finance director; McIsaac worked for the state and served as finance director for Barnstable County.
“We were going to do a little chart to show how many years of municipal finance experience we’ve had, but we decided that would be a little embarrassing because we’re a little older,” Sumner said. He added that the project was helped by a three-member task force of the finance committee, which met with the team regularly.
As for the town’s auditors, Sumner said, “I know it’s been a difficult process, but Powers & Sullivan has been the auditor for the town since 1989.” The auditors issued their 2020 management letter only after a former town accountant raised alarm bells about the accounting problems. In the previous year’s audit, there was no management letter at all. Nevertheless, Sumner defended the auditing firm. “They provided a lot of assistance and backup information to us as we started to work on this project,” he said.
McIsaac said that, as the team leaves, she will draft an exhaustive report on their findings “to be sure they stay on track and keep their eye on the ball. I’m pretty sure you won’t see this again,” she said.
Select board candidate Judith Ahern asked the finance team if they had interviewed former town administrators Harry Terkanian or Dan Hoort, or former Town Clerk Joe Powers.
Sumner said that, while he has worked with Terkanian on a number of issues, the team did not meet with Hoort or Powers.
“For us, the detailed work that we’ve done is where we really needed to focus our energies on, and the numbers don’t lie in these cases,” Sumner said. “It was a snarled ball of yarn. Missing links were broken threads for us, and we worked with a lot of diligence to identify issues and make corrections. That was where the value was for us.”
Wellfleet Town Meeting
ON THE WARRANT
In addition to the town’s operating and capital budgets, at least 50 other warrant articles will go before town meeting voters on Saturday at 10 a.m. Among them are the sprinklers at the elementary school, hiring police officers and firefighters, zoning amendments, and easements for the Herring River Restoration Project.
Elementary School Sprinklers
Three years ago, it was revealed that a required sprinkler system had not been installed at the Wellfleet Elementary School when the building was renovated in 1990. Without it, it is in violation of the state’s building code.
Article 23 asks town meeting voters to approve the bonds required to pay to install a $2.2-million fire suppression system.
If the debt exclusion is approved at town meeting and at the June 21 special election, the funds will be borrowed and paid for over a 20-year period. The annual cost of $187,280 would add $0.067 cents to the tax rate, costing the median priced single-family homeowner $41.46.
Hiring Police Officers and Firefighters
With the police summer reserve officer program being phased out and fewer on-call firefighters, Articles 15 and 16 call for Proposition 2½ overrides to fund both two new police officer positions and two new firefighter, paramedic, or EMT positions.
The need for more officers is an unintended consequence of the governor’s police reform law passed in December 2020, requiring one standard of training for all officers, said Police Chief Michael Hurley.
Having 8 to 10 summer officers costs about the same as two full-time positions. “Now we’re at this crossroads,” Hurley said.
The $186,759 override to fund the police officer positions would add $0.067 to the tax rate and would cost the owner of a median priced single-family home $41.34, though the tax impact may decrease if Chief Hurley is able to obtain a federal COPS grant that would help pay for three years of the position. “I want to help the best I can,” he said, “but the town needs to commit to the positions.”
Fire Chief Richard Pauley says he needs to fund four more full-time positions within the next two years in order to move two ambulances out the door with five people on shift.
The $206,964 override to fund the firefighter, paramedic, or EMT positions would add $0.074 to the tax rate and would cost the owner of a median priced single-family home $45.81.
Contractor’s Yard Definition
Article 43 would amend the zoning bylaw to change the definition of a contractor’s yard.
The current definition “just isn’t working for the town of Wellfleet,” said planning board chair Gerry Parent during the April 26 select board meeting. The amendment would require that contractor’s yards be granted a special-use permit, an idea proposed by the planning board last January.
Article 38 would grant temporary easements for the Herring River Restoration Project to restore tidal flow and provide ecological benefits provided by a healthy estuary.
Article 40 seeks town approval to continue support for the state’s Dept. of Transportation Route 6 and Main Street intersection project, anticipated to commence construction in 2023. “That one should be the end of a very long process,” said Ryan Curley, the select board chair.
A citizen’s petition asks for a tree preservation bylaw “supporting the preservation and protection of trees on residential, municipal and commercial lots preceding or during significant demolition or construction activity.” The proposed bylaw’s provisions are impractical, Curley said. “There’s no capacity to review every single landscaping project.”
A special town meeting will be held Sept. 10 to consider articles on the original draft warrant, which has now been split in two. Key items in September will include other zoning amendments and the purchase of Maurice’s Campground. —Michaela Chesin
