Finance Committee 2001 Report

Dear Fellow Voters:

The Finance Committee, appointed by the Town Moderator, serves as the citizens' watchdog for the finances of the town and advises voters at town meetings on financial matters. The following message serves as a preface to town voters concerning this year's special and annual town meetings.

FY 2002 Operating Budget

The Finance Committee is pleased to report that the FY 2002 operating budget, proposed by the Board of Selectmen and Town Manager, adheres to the Town's 10-Year Fiscal Plan of limiting property tax increases to no more than 2.5% each year. This was a difficult goal to achieve this year due to staggering increases in health insurance premiums for town employees, and the Selectmen and Town Manager are to be commended for their diligent efforts in meeting this goal.

The proposed FY 2002 budget includes permanent funding for four new positions in the Department of Public Works budget which were approved on a trial basis last year. The staff of the newly established Division of Buildings & Grounds, by all accounts, was very successful in providing better custodial and maintenance of town-owned buildings and grounds, thus warranting continued approval in the budget.

Notwithstanding the Finance Committee's recommendation to town voters to approve the FY 2002 operating budget, the Finance Committee has two major concerns with this budget:

Stabilization Fund - The town has no stabilization or "rainy day" fund similar to other towns on the Cape. The town lives on a hand-to-mouth existence, financially precarious during times of recession. The town generates approximately $1,325,000 annually from parking revenue. If a stabilization fund is not enacted by the Board of Selectmen for 2003, the Finance Committee intends to submit an article at next year's annual town meeting which would annually allocate 25% of parking revenue to a stabilization fund.

Schools - The Finance Committee approved the School's budget with great concern and reluctance. After several years of requesting the following, the Finance Committee placed the School Committee on notice that it will not approve the 2003 budget without a long term fiscal plan for the Schools. The reasons are as follows:

- Declining enrollment (40.8% decline in children age 17 or under in Provincetown per 2000 Census data)

- Highest cost per student in state compared to other small school systems

- Projected enrollment of more Truro than Provincetown students in the high school at 80% reimbursement-a 20% subsidy by Provincetown taxpayers for Truro students

- Increased recruitment and enrollment of "school choice" students from outside the district at less than 50% reimbursement

All these factors point to a financial collision course for the school system and the town if they are not addressed soon. The Finance Committee has requested that the School Committee and Superintendent initiate discussions with Truro to establish a regional school system and develop a long-term financial plan for the school system prior to the preparation of the 2003 budget.

Affordable Housing Included in this year's special and annual town meetings are six articles which promote the further development of more affordable housing, the lack of which is threatening the very existence of a year-round community in Provincetown. The Finance Committee strongly urges voters to adopt these articles.

Wastewater After many years of careful planning, voters will be requested to cast the final vote to approve the "design, build and operate" of a centralized wastewater treatment system for $16.5M to be operated by a private vendor for twenty years and paid for solely by the users of the system. In order to qualify for the State's 0% interest loan, the project must be approved at this year's town meeting or the loan will be become a 2% interest loan and add $3,015,000 in unneeded borrowing costs. The Finance Committee strongly urges voters to adopt the wastewater-related articles. Cape End Manor The Finance Committee urged the Board of Selectmen in 1996 to develop a long­term plan for the future of the Manor. It has taken six years to arrive at the conclusion that the Town does not have the financial ability to be in the nursing home business, and in the meantime, the town has posted cumulative losses of $2,500,000 - 3,000,000, which could have been applied to other important projects. We cannot continue to operate the Manor on a band-aid, year-to-year approach, and we urge the Board of Selectmen to bring the issue of the future of the Manor to a fall Special Town Meeting. In the meantime, this year's projected deficit of $130,000, consistent with past history, has escalated to potentially $491,000 by June 30, fiscal year's end. There is some hope that a one-time supplemental appropriation may come from the Department of Public Health to partially offset the deficit; otherwise, voters will be requested at a fall special town meeting to increase the 2002-operating budget by $361,000.

Library/Heritage Museum After lengthy consideration, the Finance Committee recommends that voters authorize the conveyance of the Heritage Museum property to the Board of Library Trustees for development as a library. The town's borrowing authorization would be limited to $1.05M in Fiscal Year 2004 (when the project would begin) subject to the following amendments to be introduced by the Finance Committee: (a) Limit town borrowing to $1,050,000 in Fiscal Year 2004; (b) Conveyance subject to Board of Library Trustees receipt of at least $1,878,456 in State grants; (c) Conveyance subject to Board of Library Trustees raising a minimum of $1,072,000 in private donations and other grants.

The Finance Committee recognizes the need for a new library. However, we continue to have major reservations regarding the incompatibility of a library in a building also housing the Rose Dorothea: a tourist attraction; the lack of parking; the potential for low architectural cost estimates and cost overruns beyond $4M (given the total historical restoration), building footprint expansion and conversion of the building to a library; and greater than projected construction inflationary increases by 2004. The MacMillan Pier and School renovation projects, recently approved and currently underway, are already experiencing financial strains, overruns and cutbacks. All are causes for concern as is the reality of a significantly increased operating budget for a new expanded library.

In final analysis, the Finance Committee concurs with the Board of Selectmen that the town should spend no more than $1.05M on a new library in accordance with the 10-Year Fiscal Plan, but urges the Board of Selectmen and Library Board of Trustees to conduct frequent "financial reality" checks to determine the continued feasibility of the project.

Summary The town is embarking on the largest capital development program in its history totaling $40-45M, not including borrowing costs. Fortunately, we have the benefit of a 10-Year Fiscal Plan to provide us with a blueprint for financial stability as we consider future issues of importance to voters. The Finance Committee is an active group of citizens who value their role in town government and strive to serve the community with pride and prudence.

Respectfully submitted,

The Provincetown Finance Committee William Dougal, Chairman; Gail Enos, Richard Holland, Gordon Siegel, Jennifer Bedard, Ruth Gilbert, Robert Vetrick, Irene Rabinowitz, Alice Foley, Sue Buerkel