City of Beaufort officials are crafting a budget with spending cuts and tax increases to offset expected revenue losses of more than $940,000 combined for the current and next fiscal years.
City Council discussed the proposed $16.87 million budget for 2015 -- $705,820 less than what department heads requested -- during a work session Tuesday. It was the first of at least four meetings to prepare for the 2015 fiscal year, which begins July 1.
City staff recommends cutting spending by about $167,500 in 2015.
However, those cuts could be steeper if City Council does not approve tax increases to address a deficit this fiscal year and to cover debt payments, officials said.
According to a presentation by city manager Scott Dadson, the city will be $257,000 short at the end of this fiscal year. He proposed the city enact a temporary 3.72 "deficit mill," allowed by the state, to make up that shortfall. He also proposed the city raise the property tax rate that is dedicated to debt service.
"Obviously, if we don't do anything, then you'd have to find $257,000 in additional cuts," Dadson said.
For a $150,000 property, the deficit tax would mean a hike of $22, and the debt-tax increase tack on another $10.
The city will also face a $595,000 revenue reduction next fiscal year, he said.
Dadson attributed the revenue drop to two reasons:
- A 5.6 percent decrease in property values after of the countywide property-value reassessment, coupled with a decline in the county's tax-collection rate, from 96 percent to 92 percent. Those factors account for about $345,000 in lost property-tax revenues for fiscal year 2015.
- A $250,000 decrease in business-license tax revenue because of state-level changes related to how businesses are classified.
Not all revenue sources are declining, Dadson added. Hospitality taxes are up this year, but the increases are not enough to offset the other reductions.
The proposed budget includes no cost-of-living pay increases for employees.
Dadson, planning department director Libby Anderson and Police Chief Matt Clancy presented their departments' operating budgets to council Tuesday.
Among the larger expenses from those presentations that didn't make it into the proposed budget are two vehicles and a boat for the police department to replace aging ones.
Follow reporter Erin Moody at twitter.com/IPBG_Erin.