Budget deficit haunts Williamstown government

The Williamstown government is currently facing a projected budget deficit of almost $700,000, according to Town Manager Steve Patch. Having already trimmed the deficit from the $1.1 million they estimated in the fall, Patch and other town government officials are running out of options.

Williamstown budgets are proposed and drafted by Patch, the town manager. Within the next week, Patch will have completed his budget for Fiscal Year ‘99, and on Feb. 24 will present an overview of his budget to the Town Finance Committee. They “look over it,” Jeff Strait, Williams Associate Professor of Physics and Town Finance Committee Member said.

Patch explained, “What they’re really doing is critiquing how I put the budget together. They may have some recommendations for me; they may have areas that I have not considered that they think I need to; they may see cuts they think I need to make; they may see places where they think I should increase.”

Once the Town Finance Committee and the Board of Selectmen (another advisory body) have made their suggestions, they will vote on whether to recommend the budget to the May 19 town meeting. At the town meeting all Williamstown registered voters are welcome to come, voice their opinions about the recommended budget, suggest changes, and vote on whether to accept it.

“The ultimate decision is made by the voters,” Tom Murtagh, Williams Professor of Computer Science and Town Finance Committee Member, said.

This year, however, the process may not be a smooth one. Patch currently estimates that proposed expenditures exceed projected revenues by approximately $686,000. This figure is already significantly reduced from the $1.1 million deficit projected in the fall, thanks to Patch’s efforts. “What I have done in my budget is make a tremendous amount of cuts,” Patch said. “The Finance Committee will have to take a look; the schools will have to take a look; but at this point there is just not anything else the town can do.”

Patch cites several factors contributing to this year’s deficit. Generally the budget, which Murtagh estimates to be on the order of $10 million, is divided roughly into thirds: one-third for each of the two schools (Williamstown Elementary and Mount Greylock Regional High) and one-third for the town, to fund the police department, the highway department, the health department and one-third for other services. According to Patch, each of these three main areas is calling for increased expenditures this year.

At the beginning of the year, the town itself estimated an increase of $150,000. Although Patch’s cuts have reduced this number, the town is still projecting a moderate increase. “Then you have Mount Greylock, which is looking at an 11% increase of around $280,000, and the elementary school is going up $210,000,” Patch said. An additional factor, Strait notes, is that states now tell the town how much money to spend on schools, a figure not necessarily based on the number of students. This reduces the town’s flexibility when it comes to school budgets.

Furthermore, the town’s expected revenues have been hurt by a decrease in “free cash,” a term which refers to the surplus left over at the end of each fiscal year. Williamstown has always used all of its free cash towards the next years budget. In FY 1998, the town had approximately $700,000 in free cash left from the year before. This year, however, the level of free cash is only $329,000 — roughly a $400,000 shortfall. “Right off the bat, if you had the exact same budget as last year, you are automatically $400,000 short,” Patch said.

Confronted with a deficit, the town has several options. It can look to alternative revenue sources, such as state funds, stabilization funds (a fund set up to pay for capital projects), trust funds from the cemetery department and borrowing through the issue of capital bonds. The town can also make cuts in the budget. Patch has done both these things, which led to a decrease in the deficit from the original $1.1 million to the current $686,000.

These actions are not enough, however: the town must pass a balanced budget or the state will not authorize it to collect taxes. This leaves the town with two options, according to Patch: cut more, or raise taxes.

Making further cuts is not a pleasant option. “In recent decades,” Strait said, “the town has gone beyond providing merely basic services, like roads, schools and police. Nowadays we also have a recreation committee and a senior citizens center, for example. If we can’t afford to do everything, we have to make sure we fund the basic services. Optional amenities are nice to have, but if you don’t have the money for them, that’s what you get.” There is also a possibility that school funds will be cut.

The second option, increasing taxes, is also a difficult one, because of a referendum passed by Mass voters in the 1980s called Proposition 2 1/2.

Proposition 2 1/2 forbids the town from increasing levy taxation by more than 2 1/2% from the previous year. This prohibition can only be overridden if the town meeting approves it and a majority of the townspeople vote on it in a general election. “We have had several attempts to increase taxes about the 2 1/2% limit,” Murtagh said. “But only twice have they been successful,” once when funds were needed to build a new town garage, and once when the state ordered a landfill capped. Patch and Murtagh agree that overrides are difficult to accomplish.

For now, the Finance Committee and the Board of Selectmen will meet with Patch twice a week from the end of February through April in an attempt to pare down expenses. If a deficit remains when the budget is recommended to the town meeting, however, town officials may ask voters for an override.

Decisions on the budget, including a decision to hold an override election, are ultimately made at the town meeting, which Strait describes as “the top of the town government hierarchy.” The current crisis may be ultimately resolved by the voters.