Facing a major and unexpected budget shortfall, Aquinnah town leaders will call a special town meeting early next month to decide how to balance the budget. Until then, the Department of Revenue will not allow the town to issue its third-quarter tax bills.

The selectmen met Tuesday and approved a two-article special town meeting warrant for Jan. 7.

Town officials discovered the $101,564 deficit while preparing this year’s tax classification. The tax rate was approved at a public hearing on Dec. 9; the shortfall was reported at that hearing.

“A combination shortfall in local receipts, property tax revenue and the paying off [of] a short-term loan will put the town in a position where it won’t be able to cover all its bills by the end of the fiscal year,” the selectmen said in a written statement that was drafted Tuesday. The statement will appear on the special town meeting warrant as a summary explanation.

On Jan. 7 voters will be presented with two alternatives: appropriate the full deficit amount from the town stabilization fund, or combine some stabilization funds with $57,953 in department budget cuts. All town departments have been asked to identify expenses that could wait until next year.

The stabilization account currently has $282,762, including $73,978 that was transferred from the free cash account at the annual town meeting in May.

Town assessor Angela Cywinski said by telephone Wednesday that the shortfall was due partly to administrative changes this year. A new treasurer was hired to replace the previous treasurer, who retired in January.

“At some point, you have new people come in and maybe something was inadvertently missed,” Ms. Cywinski said. The payment of a short-term loan was “not planned for properly,” she said.

But the main reason was that town tax revenues had fallen sharply from fiscal year 2013.

“They didn’t come in as expected,” Ms. Cywinski said. “Last year we had a huge windfall of people paying off their back taxes, which didn’t happen this year.”

Town administrator Adam Wilson said Thursday that the borrowing note had more to do with the accountant than with the treasurer, but that there had likely been some sort of miscommunication.

“When the new fiscal year started the note was called in and we needed to pay it off,” he said. He added that income from local receipts from parking, lease payments and other sources had been off this year. “We just didn’t make as much money as we thought we would,” Mr. Wilson said.

The special town meeting will require a quorum of 36 people, or 10 per cent of the town’s registered voters. Ms. Cywinski said the selectmen, along with Mr. Wilson and town clerk Carolyn Felz, planned to call town residents after Christmas and ask for their commitment in attending the meeting.

If a quorum is not reached, the selectmen will reschedule the meeting. “As an absolute last resort, if the Department of Revenue does not certify the tax rate, the town will not have a tax rate, which means it can’t file its bills and will be forced to borrow,” Ms. Cywinski said.

Ms. Cywinski said that if all goes well, the third-quarter tax bills will be sent by April 1, with payment due by May 1. The bills will likely be higher than usual, she said, because they will include both the third and fourth quarters, as well as the difference in valuation between fiscal years 2014 and 2015.

As a result of a three per cent drop in property values this year, the tax rate has gone up from $4.69 to $5.18 per thousand dollars. The total property valuation for fiscal year 2015 is just over $702 million. There are 990 properties in town; about half are private residences.