3/06/10 — At the end of a nearly five-hour budget session marathon Wednesday, the Town Council arrived at one of its main questions for the 2010 Financial Town Meeting: should the town reverse its decision to purchase the Merrick property (Plot 6, Lot 147) along Water Street? To do so would save $67,000 in annual debt service. The town’s total debt service, not including the Merrick tract, is currently budgeted at $1,828,083.

In August 2008 voters at a special Financial Town Meeting decided to purchase the 9,900 square foot property for $900,000. At the time some questions were raised about the purchase price, but the voters agreed that it was in the town’s best interest to own the property. It abuts a larger piece across from the National Hotel that voters also agreed to purchase. The conclusion of the purchase has been held up with title issues.

At Wednesday night’s meeting the council suggested that due to the tight budget and overall poor economic climate it may no longer be reasonable to purchase the property. First Warden Kim Gaffett said that since the voters approved the purchase, they would also have to decide whether to back out of the deal.

Reneging would incur a $1,000 penalty and the potential loss of a valuable property.

The council spent time brainstorming on how to include the debt service in the budget should voters opt to follow through on the land purchase.

Council member Peter Baute suggested that since town employees have been given a steady wage increase of 3 percent each year, it might be time to talk about a wage freeze; he also suggested cutting the Town Council’s wages by 20 percent.

Or, if not a wage freeze, Baute said that decreasing workers hours to 39 or 38 a week could accomplish the same goal.

Council member Ken Lacoste, who earlier in the meeting expressed a desire to level fund some departments that were facing a cut, offered that some departments that were being level funded might now need to be cut.

“I think we need to come back with sharpened pencils and see what we can find,” Lacoste said.

All the council members expressed concern over the bleak financial forecast.

“This is going to be a tough year,” council member Dick Martin said. “We have to be realistic, if we want to get this thing done we have to start making cuts.”

Gaffett asked whether using money from the general fund to pay the debt service on the Phelan property would be an option. Town Finance Director Amy Land explained that the general fund has fallen to $1.3 million, or roughly 13 percent of the total budget. A further decrease could negatively affect the town’s credit rating.

The total budget represents a 1.06 percent increase over last year’s to $10,934,869.

School support

School support, which makes up the largest part of the budget at more than $4.2 million, requested an increase of 2.68 percent. However, the town is recommending only a 0.31 percent increase to a total budget of $4,243,549, exactly $100,000 lower than what was requested. The $13,000 increase the town is recommending would not cover the increase in teacher wages, which is estimated at $42,000.

The operational budget of the school is only increasing by $32,000; however, according to a memo from School Superintendent Bob Hicks, the school is requesting $113,000 due to the separation of federal funds from the operations budget and also a small decrease in anticipated state aid.

Town Manager Nancy Dodge said that the school currently has a fund balance of $130,000, and that while the town cannot instruct the school to use that money toward its budget, it may want to consider it. Hicks said that the fund balance was held in reserve for emergency expenditures. If that money was spent on the budget and an emergency occurred, the town would likely have to step in a cover the cost.

School Committee Chair Bill Padien also explained that the committee was planning to use some of the money from the fund balance on capital improvements. He mentioned using the money to replace the skylight over the music room and to fix the drainage system.

“We plan to use the fund balance on some capital improvements that need to be done and cannot wait,” Padien said. “I think $100,000 is excessive to ask us to cover.”

Committee member Sean McGarry also expressed his displeasure with the cut in funding. He said that the Block Island School is already under funded compared to the percentages other communities spend on their schools (see story, page 6). He also thought the town should seriously consider adding a large solar array at the school to help bring down energy costs, which he said would save the town money in the long run.

Another problem with using the fund balance this year was what to do the following year. Hicks explained that if they were to use nearly all of the school’s reserve funds this year then the school would be in even more trouble in 2012.

“The reason I suggested it,” Dodge said near the end of the work session, “was that I sat on a School Committee for 12 years and we never had a fund balance.”

As this was only the first work session on the budget, the council made no final decisions on school support.

Community projects/support

The council moved on to consider Community Projects and Support with a recommended budget of $281,802. The town is suggesting an 8 percent cut in funding to these entities compared to last year’s budget.

Both the Block Island Volunteer Fire and Rescue and the Early Learning Center received a $10,000 reduction in funding after receiving level funding for the last three years. The Early Learning Center already contributes $40,000 to its budget through fund-raising, and had committed to $45,000 for next year’s budget; with the cuts the center will need to raise $69,000 to meet its operating costs.

Fire and Rescue has $150,000 in reserve that it planned to commit to a new fire engine and ambulance; however, the council suggested that the organizations might have to use some of that fund to make up the difference this year.

Funding for the Coast Guard facility was also reduced by $5,000 due to savings in energy costs, while the Senior Citizens Advisory Committee was added as a line item for the first time with $1,000.

Most of the audience filtered out following the school and community projects were discussed, leaving the council to trudge through the remaining 22 pages of the proposed 2011 budget.

Revenue

On the revenue side, the property tax levy would be increased by the maximum 4.5 percent allowed by law, which translates into a 3 percent increase for total revenue from taxes, which comes in at $8,067,381. State aid is expected to drop by 9 percent to $861,586.

Revenue from licenses, permits and fees is expected to increase 5 percent or roughly $15,000 to $315,325 thanks to projected increases in liquor licenses, recording fees and town clerk licenses and fees.

Miscellaneous town fees and income are forecast to be down by 5 percent to $1,430,777. This section included income from items such as mooring rentals, police fines, camp tuition and interest on investments. Lacoste pointed out that the mooring rentals for this year are expected to bring in $330,000, but are only being budgeted for $310,000 for next year. Land explained that this line is very dependent on the weather and could fluctuate. However, Lacoste said that last summer had pretty terrible weather and yet is still projected to bring in a large amount of revenue. Land agreed that there would be more money for the budget if they were willing to go with a less conservative estimate for the rental moorings income.

Various departments

The town administration budget is recommended to receive a 6 percent increase in funds to $1,000,896 based mostly on normal wage increases of 3 percent and an extra $29,000 for the municipal alarm system, which is being budgeted for the first time. The Town Council wages are currently recommended to remain level as they have remained for the last four years.

The Police Department is being recommended to receive a 4 percent increase in funding to $580,284. When one council member pointed out that the percentage of benefits to salary is much higher in the police force than in other municipal departments, Lacoste replied that it “has something to do with people shooting at you rather than yelling at you.”

The police vehicle maintenance budget also increased from $3,000 in 2010 to $10,000 in 2011. Land explained that this line reflected the reality of what the police were spending on vehicle maintenance.

“If you look at 2007 to 2009 they spent $10,000, $11,000 and $9,000,” Land said. “I know a pattern when I see one.”

The town highways and maintenance will remain level at $403,432. Gaffett pointed out that electricity for town offices is budgeted for nearly the same for 2011 and asked whether the new solar array at Town Hall might make an impact on that line. Dodge said that they had not yet factored those savings in but will be looking at that for future meetings.

A member of the audience brought the issue of street lighting to the attention of the council, suggesting that some streetlights could be turned off in the winter to save money. Martin agreed that some might be able to be turned off but that there were also areas that needed more light. He suggested that might be an issue for the town’s newly formed Island Energy Plan Committee to look into.

A 3 percent increase is being recommended for the Harbors Department bringing its budget to a total of $438,237. Another $6,500 is being devoted to shellfish management to allow for more shellfish seeding in the Great Salt Pond. The council considered this a worthy increase due to the amount of revenue the shell fishing licenses produce.

Money toward maintenance for restrooms and moorings is also being increased.

One area of possible savings in the Harbors Department is in the wages of the new harbormaster, which will likely be less than the current projection based on the former harbormaster’s salary.

The Recreation Department’s budget is seeing a 3 percent cut to a total of $273,882, which is significantly lower than the 15 percent increase requested. One of the biggest requests that will not be recommended is the addition of a recreation assistant for more than $30,000. Recreation Director Rob Closter said he thought the addition of an assistant would lower costs elsewhere. The rest of the cuts were made by providing slightly less funding for programming, camp and event expenses. The budget also recommends significantly less money for payroll taxes than in previous years.

The Capital Improvement budget is set to increase by $28,500 or 39 percent more than 2010 to $101,113. New items for 2011 include $35,000 for repairs to the chief’s house at the Coast Guard station, $25,000 for a flair mower for the Highways Department and $5,000 for planning renovations of the beach pavilion.

Chair of the Harbors Committee Ted Merritt was concerned that the $10,000 the committee had requested for repairs to the New Harbor boat ramp was not included. He thought that since so many visitors to the island are boaters repairing the ramp should be a priority.

The Finance Department ($289,824) and the Department of the Building Official ($185,811) are being recommended for a 1 percent increase to cover normal wage increases, while fire, rescue and emergency management will be funded evenly with 2010 at $250,683.

The Library Department is asking for level funding at $447,481; however, Gaffett suggested that perhaps closing the library on Sundays by not replacing a vacant part-time position might be a way to save some money.

The Boards and Commissions budget is recommended to increase by 6 percent to $161,569, which is due mainly to costs associated with reopening the North Light.

The funding for GIS technology is recommended to increase by 12 percent to $107,132 to cover license and maintenance contracts and equipment maintenance.

The Town Council will hold a second budget work session on Wednesday, March 24 at 7 p.m. and will keep March 31 open as a possible third word session if needed.

“There are a lot of initiatives that we all wanted to include but aren’t even on the table,” Gaffett said. “In that sense there have already been cuts and there may need to be more.”