Bonds

Unsteady leadership has challenged the financial stability of Wellfleet, Massachusetts, according to a state review of the town’s financial management that was recently made public.

High turnover rates in key government positions over the last decade left the Cape Cod town of 4,035 without sustainable revenue streams and in need of fundamental reforms, the Division of Local Services Financial Management Resource Bureau concluded after completing a top-down review of the town’s finances at the behest of local officials.

According to the report, town officials requested the state review because in recent years they have struggled to “provide steady leadership, financial stability, proper procedures, and an environment that fosters communication and collaboration.” 

That impacted Wellfleet’s ability to create an annual budget, fund capital purchases, set its tax rate, and present timely, accurate financial reporting, the report said, linking those problems directly to the town’s ongoing struggle to find and retain qualified personnel in key finance positions. 

The town has had nine accountants, six treasurers, and two collectors in the last decade, the report said. It’s also had six chief executives, or administrators, over the period with its current town administrator, Richard Waldo, the former director of public services in Provincetown, Massachusetts, being sworn in March 2022.

The rotating leadership has left the town without an actionable long-term financial strategy, DLS said, and it has failed to meet state requirements and deadlines.

High housing prices make recruitment hard.

“The recent spike in housing costs coupled with limited inventory across Cape Cod has only exacerbated a shortage of qualified local municipal officials,” the report said.

While the town has worked to entice new personnel and retain existing staff, it is still largely reliant on an ad-hoc staffing strategy that engages with “a select few retirees and consultants as a temporary solution,” the report said. 

“Without expanding the potential hiring pool, the current trend of shuffling employees from one community to the next intensifies this problem by creating recurring vacancies,” the report said.

Securing reliable income streams should also be a top priority for the town, because Wellfleet was too dependent on voter-backed tax overrides for general fund allocations, the report said. Voters have approved six override requests in the current fiscal year alone to fund operations and twelve over the last ten years.

“The town’s permanent overrides in total represent $3.1M, or 15% of the $20,540,850 tax levy base, reflecting the effect of compounding,” the report said. “Taxes levied on Wellfleet’s residential class make up 96% of the tax levy.”

The report also highlighted the town’s reliance on voter approved exclusions to the state’s Proposition 2 1/2 property tax limits
to fund capital work as another cause for financial concern;  all of the funds cleared for debt service over the last six years have come from those sometimes unpredictable voter-backed exclusions, the report said, includinga $2.7 million allocation for this fiscal year.

“A review of the town’s historical data tells the story of expanding budgets, constrained finances, and the taxpayers’ willingness to grow the budget to increase public safety, school programs, and fund various capital purchases. It also brings to light an ever-increasingly risky pattern of relying on the annual town-wide support to increase the tax base in order to provide services,” the report said.

The town does enjoy a AAA rating from S&P Global Ratings, though the state’s report says it stems from “the community’s overall wealth factors” and is not indicative of “the deeper financial management issues.”

 Wellfleet’s recent hiring of Waldo, “a seasoned local official,” as town administrator, and of a new human resources officer was a step in the right direction and brought “new energy” to the city’s financial planning, DLS said.

However, the report said, the town still had a long way to go to improve its fiscal health and all involved must “display a sense of diligence and responsiblity for changing the narrative and restoring the community’s financial management,” the report said.

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