Hilton Head residents could pay more in property taxes, town council says

Town of Hilton Head spending for the fiscal year beginning July 1 will likely remain unchanged, but residents could see a slight increase in their property tax bills.

Town manager Steve Riley presented a preliminary budget to Town Council on Tuesday.

General operating expenses would be trimmed by about $600,000, funded in part through the elimination of three vacant positions within the Community Development Department.

Another $1.3 million would come from smaller payments on town debt.

On paper, however, the town's consolidated municipal budget would shrink nearly 20 percent from $72.7 million to $59 million.

In reality, the two figures will look nearly identical. The discrepancy lies with money budgeted in the current fiscal year to renourish beachfront at the island's heel, which has yet to be spent. That money will eventually be rolled over in the fall to next year's budget, Riley said. The project was pushed from January to October due to permitting delays.

Though spending will remain fairly even, the town expects to collect more than $800,000 in additional property taxes through a slight tax increase. Town Council members spoke in favor of increasing the millage rate to account for population growth on the island over the last decade.

For the most part, counties and municipalities are forbidden under a 2006 state law from raising property taxes to pay for town services beyond increases in population and inflation.

Numbers released in March of the 2010 U.S. Census showed Hilton Head's population rose 10 percent from about 33,800 to 37,000 from 2000 to 2010.

"If we do not take the increase this year, we can never do it again," Riley said.

His proposal would increase the town's millage rate for general operating expenses. Millage rates to pay for public improvement projects and town debt would not change. The total millage rate would increase from 18.54 to 19.35.

A home valued at $350,000 would pay an extra $11.34 on their property tax bill under the new millage rate, if approved.

Mayor Drew Laughlin and others on council were concerned about the town's ability to absorb future revenue losses without some form of cushion, should the national and local economy continue to struggle to recover, as well as losses in tax revenue from property value reassessments scheduled in 2013.

Early indications are that overall values will decrease, which has significant budget implications for the future - necessitating possible cuts to services, programs and staff, Laughlin said.

Councilwoman Kim Likins agreed.

"I think citizens would rather have us implement a slight increase in the tax rate to maintain the level of town services being provided," Likins said.

Council meets again at 4 p.m. Thursday in Council Chambers for another budget workshop session to review use of tax increment financing and proposed public improvement projects.