Watching spending as vital as finding new revenue

info@islandpacket.comJune 12, 2013 

Henry C. Chambers Waterfront Park.

STAFF PHOTO

Beaufort Memorial Hospital CEO Rick Toomey brought nearly everyone in the room to their feet when he asked those attending Tuesday's Beaufort City Council meeting to stand if they opposed a proposed fee on nonprofit groups, churches, schools and hospitals.

It was the second disappointment in as many days for a council seeking new revenue.

On Monday, Beaufort County Council decided not to hold a referendum on a 1 percent local option sales tax, which Beaufort Mayor Billy Keyserling and other municipal leaders have endorsed.

The fee the city wants to impose on nonprofit organizations isn't necessarily dead, but after Tuesday's demonstration, it almost certainly would be unpopular. Nonprofit groups, churches and schools, which don't pay property taxes, would pay 0.1 percent of the appraised value of their property. The money would help support emergency-response services.

The council also is considering a $40 fee for all vehicles registered in the city. That money would be used for street projects and maintenance. It is not likely to be any more popular, even if opposition to it proves to be less visible.

Resident Dot Gnann, a former County Council member who is not unsympathetic to the city's revenue predicament, said at Tuesday's meeting: "I've read your budget not once, but twice, and you're in a mess."

Indeed, local governments by state law are limited in their ability to set property-tax rates, particularly in a reassessment year. And this year's reassessment is causing more angst than usual because real estate values are expected to have declined dramatically since the last reassessment five years ago.

But the city of Beaufort has done much to make its own bed.

Among its biggest challenges is an expiring tax-increment financing district used to maintain Henry C. Chambers Waterfront Park. The county and Beaufort County School District will resume taking their slices of property tax revenue from the district, which for years had gone to the city.

The premise of such special tax districts is to pay for capital projects, and it's a reason they don't last forever. But the city also used some of the money for what are essentially ongoing maintenance expenses. Over time and perhaps imperceptibly, the scope and cost of city government increased.

The new revenue sources the city has set its sights on could have much the same effect, particularly the local-option sales tax, which might be revisited in 2014. State law requires that a portion of the money go to property-tax relief, but as much as 37 percent would go to the local governments where it is collected -- with no designated purpose and no sunset provision.

Unfortunately, sales taxes can prove to be unreliable income, which could leave the city again scrambling to replace money it had come to rely on.

Since the onset of the Great Recession, the city, to its credit, has hired out services it once provided, reducing payroll and benefit obligations that hobble many local governments.

That's fiscally responsible, but it's not quite the same thing as limiting government's scope. In fact, the city's ambition -- which includes 100-year plans, day docks, commerce parks and water-sport centers -- continues unabated. Though many of the projects pushed by city leaders are perfectly legitimate -- potentially even beneficial -- too often not enough consideration is given to how it all will be maintained in the long term.

Instead, obligations tend to expand until people stand up -- sometimes literally -- and say, "Enough."

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