Twin effects of the recession — less funding and more needy Islanders — led Martha’s Vineyard Community Services to post a deficit of nearly a quarter of a million dollars this year, according to the annual report enclosed in today’s Gazette.

The deficit is half that which Community Services accrued the previous year. “This represents real progress but is still not sustainable over the long-term,” wrote the director of administration and finance Bernadette M. LaPorte.

The board has set a goal of cutting the operating balance further, “bringing us closer to financial balance,” but yesterday executive director Julia Burgess said further cuts had not yet been determined.

“We are extremely grateful for all the support we have received,” said Ms. Burgess, who noted that organization’s services are “absolutely essential” in the current economic downturn.

Community Services runs several programs: support for survivors of domestic and sexual violence, early childhood programs, disability services, counseling services for those with mental health or substance abuse problems, and a second hand shop in Vineyard Haven.

The state budget-cutting process remains in flux, leaving Community Services’ budget fluid too. Ms. LaPorte called the ongoing state process “a moving target that made planning at our agency a matter of guesswork and crossed fingers, and required repeated trips to Beacon Hill to lobby the legislature for support.”

Ms. Burgess said state lawmakers are “making a lot of decision with a lot of competing interests, We were lucky that the recent 9C cuts did not include human services and we hope that remains to be the case.”

The bulk of Community Services’ funding (about 42 per cent) comes from public contracts, and that revenue dropped by nine per cent.

Revenue from private contributions, which makes up about a quarter of the agency’s funding, was $1.23 million in the fiscal year 2009, up from $967,000 the year before. The boost was partly due to accounting for the 2008 Possible Dreams Auction, which was held in August, before the worst of the national recession was realized. The 2009 year’s auction was down on the previous year.

Ms. Burgess said she was especially disappointed that a new program to foster training and research had become a casualty of the budget cuts. Called Community Building and Innovation, the program sponsored a disability conference on the Island last fall and held a series of luncheon meetings on issues ranging from attention deficit disorder to graceful aging. The program has been suspended.

The report shows a rising call on the agency’s counseling services — the Island Counseling Center’s caseload is 70 per cent larger than it was just three years ago. Program director Alice Cook reported she is “watching closely for a spike in the Vineyard community’s needs this winter. The increased economic distress . . . can lead to increased anxiety, depression and other mental health issues that cause difficulty in functioning.”

Already business is booming at the Thrift Shop on Chicken Alley, which raised record revenues to support the agency’s work. Ms. Burgess writes that “this boom is bittersweet — it speaks to the community’s need, as an indicator of hard times.”

The Thrift Shop’s Sandy Pratt reported a new trend last year — people buying Christmas presents at the Thrift Shop. “Already this year I’ve had people come up to the counter with something and tell me, ‘You know, this is going to be a Christmas present.’ And they’re really excited. It’s not like they’ve gone to Walmart and spent money they don’t have to spend. At Christmas, the recipient gets something one-of-a-kind, the giver doesn’t go into debt buying it, and everybody has a good time,” she said in the annual report.

At the agency’s Nov. 5 annual meeting, board president Susan Wasserman, the longtime volunteer, board member and former interim executive director, and vice president Elizabeth Rawlins, both stepped down. Wiet Bacheller becomes the board president and Victor Cappocia vice president.

Stepping down from the board this year were the Rev. Rob Hensley and Lynn Webster.