Hilton Head setting priorities in tight times

Hilton Head Island is in a tough financial spot this year, but it could be a lot worse. Now is the time for town leaders to get in front of the problem and start laying out a plan for the future, or else the money the town relies on to operate and grow won't be there.

That was the message Monday afternoon as the town began a deep review of its finances and an overhaul of its priorities. The slumping economy partially is to blame, but most of the concern comes from the town's maturity. As the island approaches build-out, there are fewer new developments and fewer options for additional revenue sources, such as taxes on real estate transfers, food and beverages and overnight lodging.

Instead of looking toward the ambitious growth in recent years -- charging ahead with new pathways, roads, parks and other projects -- the town will have to take a step back and make sure it first has enough money to pay its debts and operate Town Hall, finance director Susan Simmons told the Town Council. Then it can decide which construction projects to tackle.

The goal is to refocus spending in the most effective way, she said. And that means the town might be more apt to repair an old bike path rather than build a new one, town officials said.

"We're in a good shape. The purpose of this is to just make sure we stay that way," Simmons said. "We will need to make some changes, but I believe we can stay as strong or stronger than other municipal governments in the state."

Revenue from business licenses -- the second-largest source of income for the general fund after property taxes -- still is strong, bringing in about $8 million last fiscal year. But as the economic troubles begin to hit local businesses, that revenue source could decline, Simmons said.

Tourism-related revenues also continue to increase, but there's only so much those revenue sources can grow, Simmons said.

Monday's meeting gave an overall financial picture of the town, and a summary of future needs and issues. A second workshop next week will give the council a chance to figure out its priorities, possibly restructuring its entire budget.

One of the main concerns is upkeep, said Scott Liggett, director of public projects. As the town has continued to grow, so has its maintenance needs.

In 2002, the town spent $650,000 on basic maintenance of its amenities, such as parks, roads and pathways. By this year, the cost had grown to $1.5 million, and it's expected to reach $2 million soon.

"I don't think there's anything worse than not maintaining what we have," town manager Steve Riley said. "But we cannot stop improving this island."

IF YOU GO

What: Hilton Head Island Town Council's second capital improvements program summit

When/where: 4 p.m. Monday, council chambers, Town Hall