WELLFLEET — More than a thousand errors have been corrected in the town’s books for fiscal year 2020, interim Town Administrator Charles Sumner announced to the select board at its Dec. 14 meeting.
As Sumner and interim town accountants Mary McIsaac and Lisa Souve continue to unwind “the ball of yarn” of the town’s accounts, Sumner said during the meeting, “it keeps leading to more and more issues and problems and questions.
“Fiscal ’20 is even more challenging than fiscal ’21,” he added. “These are errors that were made on both the accounting side and on the treasury side.”
Meanwhile, the Bureau of Accounts of the state Dept. of Revenue (DOR) has still not certified the town’s free cash for the last two fiscal years. These are unexpended funds that are released for future use by the town once its books have been closed and certified. Free cash normally amounts to about $1 million per year in Wellfleet.
Typically, free cash is certified upon the submission of a town’s balance sheet, according to the Bureau of Accounts. But when Sumner arrived in town in May to take over from Maria Broadbent, who resigned abruptly, he found that there was no balance sheet or general ledger. He, McIsaac, and Souve have been trying to make sense of the town’s chaotic books ever since.
In early November, Sumner announced that the town was not able to set a tax rate for the current fiscal year and might need to look at short-term borrowing to pay its bills. With help from the DOR, however, a “Plan B” enabled the town to issue fall tax bills on Nov. 18. They were due on Dec.20, and the payments are still being tabulated, according to Sumner.
While Sumner’s goal was to have the books for 2020 and 2021 closed by the end of December, the timeline got thrown off by the resignation of Town Treasurer Miriam Spencer and the authorized leave of Assistant Town Accountant Jane Tesson last month. After the books are closed, which is now expected to happen in January, the free cash accounts will be able to be certified.
Finance staffers are in the process of interviewing a retired treasurer to serve as the town’s interim. Wellfleet is also getting help from accountant Judy Sprague to put the fiscal 2023 budget and annual town meeting warrant together, Sumner said.
While an unknown variance of $765,000 remains unresolved, “nothing of a criminal nature” has been identified in the accountants’ search. “We can see signs of lack of training, high turnover, and some competency issues, frankly,” Sumner said.
The search for errors, having staff look at every transaction that occurred over the two-year period, “will give the community some confidence that we have thoroughly looked at these valid concerns that these people have and dug deep,” Sumner said.
Work on the 2023 budget begins right after the holidays.
The Next Town Meeting
A Proposition 2½ override will likely have to be voted at the next town meeting, scheduled for April 25, Sumner said. The override would permanently increase residents’ property taxes. Sumner said he would not know the amount of the override until the budget for fiscal 2023 is put together.
“Once I have the total of the budget and analyze revenues, then I’ll be able to tell the finance committee and the select board what the shortfall might be,” Sumner said. That should happen towards the middle of January, he added.
“Last year’s budget, for fiscal year 2022, came with a lot of shortfalls, in the range of $288,000,” Sumner said. The town used its reserves to make up for those shortfalls, including money from the stabilization fund and the ambulance fund and surplus revenues from other areas of the budget.
“These are one-time things we did to fund the current fiscal year budget, but they’re not really sustainable over time,” Sumner said. “Therefore, if we want to maintain all the things we have for the community, the end result is going to be the need for a Proposition 2½ override.”
A number of deficiencies in the 2022 budget will also need to be dealt with as budget transfers at the next town meeting, Sumner said. One such deficiency occurred last year when town officials underestimated the amount needed for liability insurance in 2022. The estimate was more than $70,000 too low. In total, there are nine such deficiencies totaling $200,000. At the next town meeting, Sumner plans to use money from accounts showing a surplus to make up for these shortfalls, he said.