Tax hikes sought by fire districts to cover deficits

Before the recession, booming growth helped Beaufort County's fire districts generate enough tax revenues to fund their operations.

But now, four of the five districts need to increase their tax rates to make up for anticipated budget shortfalls, officials say, and because state law limits how much the tax rate can be raised in a single year, even a maximum hike might not cover costs in two districts.

The County Council today will consider raising the tax rates for the Burton, Lady's Island-St. Helena, Bluffton and Daufuskie Island districts, a measure approved last week by the council's Finance Committee. The Sheldon district does not need a rate increase to meet its budget.

But even if the increases are approved, the Lady's Island-St. Helena and Daufuskie districts likely will not be able to generate enough revenue to fully fund their operations without an extra infusion of county cash.

"They will be able to maintain their services," said David Starkey, chief financial officer for the county. "It's not whether these fire districts are going to go belly-up, but the county will have to step in further and further."

The departments and districts are asking the council to raise tax rates in their districts by as much as state law allows. The law sets a limit for how much millage can be raised, in this case 6.4 percent, based on a combination of consumer price index data and the growth in population in the county, said Councilman and Finance Committee chairman Stu Rodman. It was originally intended to prevent governments from spending freely and passing the costs to taxpayers.

"That means the millage from one year to the next cannot be increased by more than that percentage," Rodman said. "Some of the fire districts can't live within that, and therefore, we're proposing to authorize a tax increase in specific districts."

The districts encountered similar budget problems last year, Starkey said. Previous councils set tax rates too low to cover district expenses, but counted on growth to help carry them through.

Without a rate increase, the districts will have to dip into their fund balances or get more money from the county, Starkey said.

"It's up to council to decide what they want to do in these situations," he said.

FIRE DISTRICT MONEY

Fire district operations budgets for fiscal year 2010, which ends in July

• Burton: $3,766,729

• Lady's Island-St. Helena: $4,364,450

• Bluffton: $9,340,383

• Daufuskie Island: $921,523

Expected fire district revenues for fiscal year 2010, if a suggested tax rate increase is approved, and the tax increase for an owner-occupied home assessed at $200,000:

• Burton: $3,766,435/ $23.76

• Lady's Island-St. Helena: $4,254,721/ $14.64

• Bluffton: $9,341,098/ 96 cents

• Daufuskie: $879,423/ $14.48

Note: The Sheldon Fire District is not asking for a tax rate increase.

Source: Beaufort County Finance Department