Beaufort city budget gets initial approval, along with temporary deficit tax

emoody@beaufortgazette.comMay 27, 2014 

  • In other business, council:

    • Discussed a special franchise fee district that would allow S.C. Electric & Gas to charge customers a fee so it can recoup $2.8 million it will spend putting its wires underground for the city's Boundary Street Project. The original proposal was a small district around the project where 160 customers would pay an additional 7 percent for up to 10 years. Council will not vote on the district until June 3, but members said they favored a city-wide 2 percent increase that would last about seven years.
    • Approved a $33,000 purchase of 0.144 acres from Love House Ministries, which owns the Community Bowling Center at 1140 Ribaut Road. The land will be used for the fire station the city is building on neighboring property.
    • Granted final approval to changes to descriptions of historic properties, which will allow more properties to be eligible for a tax incentive for rehabilitation.
    • Approved applying for a $12,116 Justice Assistance Grant to pay for police department equipment.
    • Approved requests related to the Beaufort Water Festival.
    • Discussed a reforestation fee for when trees are removed.
    • Discussed procedures for approving vending carts in Henry C. Chambers Waterfront Park.

Beaufort residents will likely pay next year for this year's continued declining property values.

And that cycle could continue until the economy rebounds and brings values up to a sustainable level, according to city manager Scott Dadson.

City Council granted initial approval to a $16.87 million budget for next year during a meeting Tuesday. It also granted initial approval for a temporary 3.72 "deficit mill," which would raise about $257,000.

Final votes on both are expected June 10.

That deficit mill, however, won't cover the full $345,000 deficit that city officials anticipate from this year.

The deficit is a result of factors stemming from changes in business licensing on the state level and a decrease in property tax collections.

When Beaufort County reassessed property last year, the city was allowed to adjust the tax millage rate so it could collect the same amount as in previous years.

However, values have dropped another 5.6 percent because of appeals, Dadson said. Coupled with a 92 percent collection rate instead of the usual 97 percent, the city's income has taken a hit.

"The county's estimate shortchanged us," Mayor Billy Keyserling said. "This makes up the gap for one year and this allows us to go beyond what would be the statutory limit" for adjusting the millage rate.

On Tuesday, resident Kathy Lindsay questioned whether the deficit tax would continue in the future.

It could, Dadson said, although council would need to vote on it annually. He said it could take seven to 10 years for property values and the city's property taxes to rebound, according to figures by county assessor Ed Hughes.

Former Mayor David Taub challenged City Council to do something about the city's $19 million in debt.

The debt has accumulated over the years for projects such as building City Hall, the police and court building and a fire station; repairs to Henry C. Chambers Waterfront Park; and purchasing the Beaufort Commerce Park. Counting principal and interest on the debt, the city is paying about $2.2 million this year.

Taub said by his math, the city could save about $3.5 million if it pays off the debt by 2018. Some of the bonds involved have restrictions that don't allow the city to pay off the money before a certain time.

"That debt is bone-crushing, it is an anchor around the city, an anchor at the bottom of the Beaufort River and you're just barely above water," he said.

City finance director Kathy Todd said she didn't know Tuesday whether Taub's savings estimates were accurate, but she disagreed with his calculation that the total debt -- which, before any payments, was $24 million -- carried a 40 percent interest rate. Taub calculated the city would end up paying $34 million on that debt.

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