WELLFLEET — When the state Dept. of Revenue presented its bleak financial management review to the select board and finance committee on Feb. 28, Deb Wagner, a director at the Div. of Local Services (DLS), expressed hope that the town will “see the light at the end of the tunnel.” But for town officials, one question appeared to loom large: how do they take that first step through the darkness?
Seeming optimism on the part of state officials suffused the 90-minute presentation that outlined a list of 20 recommendations for the town. Wellfleet needs to dig itself out of a three-year-long financial fiasco that has left it without a state-certified free cash account since 2019.
“You’re not the first community in the Commonwealth to experience challenges like this,” said Wagner. “It happens in small towns where there is difficulty in getting and retaining a strong finance team.
“I am confident Wellfleet will rise to the occasion and come out more successful for it,” Wagner added.
But members of the select board and finance committee wanted to know where to begin.
“We have all these recommendations, which are great, and the report is excellent,” said select board Chair Ryan Curley. “Would you be open to providing an addendum with implementation timeframes?”
“Do you provide a roadmap of any kind, with metrics for hitting various stages?” asked finance committee member Fred Magee. “Is there a ‘Do this first’ and then ‘Do this second’?”
Zack Blake, the Financial Management Resource Bureau chief at the DLS, said that his team would be happy to work with the town to design a reasonability test for each of its recommendations — but he added that “it’s really incumbent on the select board, the finance committee, and the finance department to come up with that roadmap.”
Overrides and Debt Exclusions
One of the state’s recommendations was a particularly hard pill for town officials to swallow. Wellfleet’s increased reliance on tax levy overrides and debt exclusions to fund the budget is a “cause for financial concern,” the report said.
The town’s budget is funded with five sources of revenue, the largest being the tax levy on property, which contributes 76 percent of the budget. In the past 12 years, taxpayers have approved 15 of 19 Proposition 2½ overrides, representing $3.1 million per year of additional permanent property taxes, or 15 percent of the $20.5-million tax levy base.
Debt exclusions, which are not permanent, add an additional 12 percent to the tax levy. (The debt exclusions for the $6.5-million purchase of Maurice’s Campground and the town’s share of a $38.1-million increase in the cost of the Nauset Regional High School renovation are not yet reflected in the tax levy, the report said).
“This creates a tremendous amount of potential risk if one day the reliance on the voters to pay for a vital piece of equipment is no longer there,” said Blake.
“We don’t have many other options,” said select board Vice Chair Michael DeVasto. “With a town this size, with 70-percent protected land and maximum buildout, I don’t think it’s realistic for us not to be going to the taxpayers for priorities and asking them what they want to fund going forward.”
“We have things coming that are going to be extremely expensive, more expensive than any project that the town has undertaken in its history in terms of wastewater,” Curley said. “We’re talking $300 million over the course of 20 years. How do we fund that? What tools do we have to limit the amount that we’re asking property owners to pay?”
Town officials said the situation has been exacerbated by having to function without free cash and asked the DLS representatives when that account might be certified.
“Hopefully, it can be done in time for your next town meeting,” said DLS’s Senior Project Manager Maria Bohinc.
Town Administrator Rich Waldo told the boards that Wellfleet would finish reconciling its fiscal 2022 cash books and receivables by the end of last week or early the following week in order to submit them to DLS for certification.
In an email on Monday, March 6, Waldo said the cash books have been reconciled and all that is left are the collector’s receivables for 2022, which Waldo said would be finalized within a week.
Once all the documents are submitted, the certification process will take three to four weeks, according to Wagner.
Waldo said that he does not “feel like speculating” about the free cash amount, but he said that he anticipates it being more than $1 million. He said the money will go to restoring the depleted stabilization fund before it will go to capital projects and a new capital stabilization fund.
The DLS team recommended that the town base its overrides on a financial policy, such as allowing debt exclusions only for projects over $1 million. They pointed to the town of Arlington, which seeks overrides only once every five years and then banks a portion of them for projects during the years before the next override.
Bohinc said that the recommendation to hire a full-time finance director was “the most important in the entire report.”
Currently, the department includes an interim accountant, treasurer, collector, and assessor. Bohinc said that a finance director would “make sure all the pieces are being done and coordinated together. We feel that this is what has been missing over the last few years, with the number of people rotating in and out of offices.”
According to the DOR’s report, in the past 10 years Wellfleet has had nine accountants, six town administrators, six assistant town administrators, and six treasurers.
“Hopefully, this crew will be around for a while,” Bohinc said.
Bohinc added that while many communities have a combined accountant and finance director role, the DOR recommends that Wellfleet establish the finance director as its own job so that everybody “can focus on everything singularly.”
But while the select board voted to establish a finance director position at its meeting on Feb. 23, the proposal set forth by Waldo was for a combined accountant and finance director.
“Given the complexities of recruiting on the Outer Cape, the goal is to entice talented accountants that are looking to advance their careers as a finance director,” Waldo told the Independent. “If we cannot find a suitable candidate for the dual role, we will split them to see if there is a recruitment improvement.”
The town has not yet received any applications for the accountant’s job. The updated dual finance director-accountant position has a $40,000 salary increase, from $85,000 to between $120,000 and $130,000, Waldo said. The fiscal 2024 budget will be updated to accommodate this cost increase if the town is able to find someone to fill the role, he said.
During the Feb. 28 meeting with the DLS, town officials said that funding an additional position put the town into a double bind: trying to cut its budget while also putting resources into the financial cleanup.
“The challenge I see is, you’re asking us to bring on board another senior member, and that’s great, but it’s going to be expensive,” said finance committee member Jeff Tash. “And we are looking at how to get out of this situation of having to do overrides.”
“There always are and always will be competing priorities,” Blake said. “That’s why it’s incumbent on the town to establish its vision and its goals around what it sees as priorities, and then fund those.”
“It’s worth having someone in that position to shake loose the three years of free cash that you haven’t had,” added Wagner.
“That last thing you want to do is to end up where you were two years ago,” said Bohinc.