Oak Bluffs voters agreed this week to slash the town’s 2011 budget by a quarter of a million dollars, wiping out a deficit that has frustrated town officials since the start of the new year.

“Here we are again,” said town administrator Michael Dutton at the opening of the special town meeting on Tuesday night before asking the voters to cut $249,666 from the town’s fiscal year 2011 budget.

Shortly after 7 p.m., a quorum of 118 voters was declared, and discussion began on the single-article warrant at the Oak Bluffs School. In January the Massachusetts Department of Revenue ordered the town to cut $238,000 in spending after revenue for the first two quarters of 2011 failed to meet projections.

Mr. Dutton said the town’s situation was the result of a confluence of larger economic factors and an already tight budget compared with other towns. The town began estimating the 2011 budget in August of 2009 using figures for local receipts and state aid from the relative boom year of 2008, he said. As a result the projections were considerably rosier than what has since transpired. Falling local receipts, which include motor vehicle excise, penalties and interest on taxes, meals and room occupancy taxes, payments in lieu of taxes, trash sticker fees, investment income, licenses and permits, fines and forfeitures and harbor revenue, figured largely in the town’s current deficit according to Mr. Dutton.

“All of those are down for 2011,” he said. “The economy obviously plays a very large role in this; I think everyone knows that interest rates are down, therefore investment income is down, people aren’t buying new cars so motor vehicle excise is down, and I can go right down the list.”

Mr. Dutton also attempted to head off criticism of the town in relation to the other down-Island towns.

“Everybody likes to look at our neighboring towns and say, ‘Well, why don’t our neighboring towns have these issues?’ ” he said. “Edgartown has a levy that’s about $3.5 million more than Oak Bluffs; Tisbury is a little bit higher than Oak Bluffs, but Oak Bluffs has chewed off a lot more capital expenditures over the last number of years.”

To attack the deficit selectmen eyed several unfilled positions for the majority of the cuts, including the town finance director, two teaching aide positions at the Oak Bluffs School, the zoning board of appeals administrator, a heavy equipment operator and a reference librarian. On Tuesday library trustees moved to reduce the proposed cuts to its personnel budget by $12,000 in an effort to save the position, without which they fear they will lose their accreditation. To make up the difference the trustees proposed instead cutting $12,000 from elsewhere in the library budget. Voters agreed. Other cost-saving measures proved more controversial.

Earlier this month selectmen approached the wastewater commission to reduce its annual fees for servicing town buildings. The town originally paid for half of the wastewater plant construction and selectmen have argued that by paying for use on an annual basis, the town was pitching in more than its fair share. The wastewater commission agreed to drop annual fees from $18,000 to $9,000, a figure that was reflected on Tuesday’s warrant. On Tuesday, selectman and board chairman Duncan Ross described the town’s wastewater bills as “robbing Peter to pay Paul.” But Erik Albert, owner of the Oak Bluffs Inn, disagreed.

“There’s $9,000 not coming in, that’s $9,000 that has to be made up somewhere else,” he said. “What you guys are doing with this is once again putting it on the high water users . . . I’m one of the 600 [users in Oak Bluffs] and I think that’s rather unfair. It’s easy for people to say I don’t want to pay for that, I don’t want to pay my wastewater bill but I have to.”

Former selectman Herbert Combra argued that the reduction was just.

“I paid half, every other taxpayer in this town paid half and I get no use whatsoever out of wastewater,” he said. “Some of these people downtown wouldn’t be operating their businesses as cheaply as they are. I took it out of my tax dollars to help them out, I think they should help us out.”

Voters roundly voted down Mr. Albert’s amendment to restore the town’s original wastewater fees.

Oak Bluffs voter Brian Hughes wondered why the town needed to cut at all with more than $1 million sitting in its stabilization fund, but Mr. Dutton said the town is justifiably wary of raiding its emergency fund.

“The department of revenue, for what it’s worth, today on the phone said, ‘Yes, you could fund this out of stabilization, but it wouldn’t be fiscally prudent because you’re funding operating expense out of your rainy day fund,’” Mr. Dutton said.

“We have a rainy day fund, this is a rainy day,” responded Mr. Hughes. “I know we’ve had a downturn in the real estate market but it’s not going to be forever. Why don’t we use the money we saved from the days of our surplus to fund the days that we’re down?”

Instead voters moved ahead with the cuts, which, in addition to the vacant town positions, included:

• $9,544 from street lights;

• $7,500 from postage;

• $8,300 from insurance;

• $3,000 from travel;

• $1,000 from training;

• $21,500 from ambulance fuel reimbursements;

• $500 from legal, professional and technical assistance to the conservation commission;

• $1,200 from similar assistance to the board of assessors.

“These cuts are a prayer,” said Mr. Ross. “We hope that they will work and we hope that we will not be back here for a special town meeting before the annual asking for a transfer to stabilization because they didn’t work.”