Hilton Head taxpayers could feel pain of projected hurricane bills

The estimated recovery costs for Hurricane Matthew are soaring higher than the Town of Hilton Head Island’s ability to pay — meaning taxpayers could take a hit.

The latest estimate, released this week at a meeting of Town Council’s Finance Committee, pegs total recovery costs at $82.1 million, up $27 million, or nearly 50 percent, from November projections. After reimbursement by the Federal Emergency Management Agency, the town is expected to foot about $26.7 million of the bills, according to a town document.

If the estimates hold true, it would deplete the town’s $25.8 million reserves, leaving the town with a budget deficit and vulnerable to future emergencies if other funding is not found, town manager Steve Riley told The Island Packet and The Beaufort Gazette on Tuesday. Yet, Mayor David Bennett said later in the day he’s not sure that is the case.

Property taxes could be raised to repay bonds issued to cover part of the recovery costs, Riley said, though Town Council has made no such decision.

Bennett was skeptical of the possibility of raising taxes, noting, “We don’t have enough data to draw that conclusion; the first step is to assemble data, and that is ongoing.”

Bennett said, for example, the $82.1 million total cost estimate includes staff costs that would have been included in the town’s general budget regardless.

The largest projected cost to the town is debris removal and monitoring at $55 million; beach renourishment is estimated at $8.2 million. Both categories use contractors to complete the work. The latest estimate for debris removal jumped by $20 million from the November projection.

Town officials had hoped the state would cover all or a portion of the town’s remaining costs, but Riley said Tuesday it is unlikely the town will receive enough funds.

“We have heard there will only be $30 million to be distributed to local municipalities statewide,” he said. “Our (estimated remaining) costs are $26 million alone.”

State Sen. Tom Davis, R-Beaufort, said Tuesday it is too soon to know what state funding might be available. The state budget for next fiscal year, which starts July 1, is working its way through committee in the S.C. House and is expected to arrive in the state Senate in early March.

Beaufort County is well represented in each of the budget-writing committees, which could be a positive, Davis said.

“It is uncertain how much will be available for local government, but we are well positioned to try to get that reimbursement money,” he said.

More immediately, the town has already paid about $10 million out of pocket for recovery costs without receiving any reimbursement from FEMA, Charles Cousins, the town’s deputy director of community development, told town officials Monday.

John Troyer, town director of finance, estimated that as bills roll in, the town could be out of reserves by the end of March, if no FEMA reimbursement arrives.

“Either money has to be flowing in from FEMA, or we need to be looking at short-term borrowing,” Riley told the newspapers. “We have to figure out how to pay bills and rebuild those reserves sooner than later.”

Bennett said it is important that town officials start to gather information about the amount of cash the town has available.

“If we are going to need to borrow, lets get an understanding of what that number is going to be,” he said.

Cousins said the town is working with FEMA officials on reimbursement for the first $10 million, but it is uncertain how long it could take payments to arrive.

“We were told by FEMA two weeks, a year, depending on the complexity of the process,” he said. “They told us they are just now closing out some reimbursements from the San Francisco earthquake in 1989.”

This story was originally published January 31, 2017 at 4:51 PM with the headline "Hilton Head taxpayers could feel pain of projected hurricane bills."