BCMC debt may affect tax rate

Published 3:40 pm Tuesday, May 11, 2010

Staff Writer

County property owners may face a higher-than-expected property-tax rate in the upcoming fiscal year because of fears that Beaufort County Medical Center cannot make an upcoming debt payment on its recent expansion, Beaufort County Manager Paul Spruill said in an interview Monday afternoon.
Spruill was expected to recommend a property tax rate of 52 cents per $100 of valuation in the proposed 2010-2011 fiscal year budget that he was scheduled to present to the Beaufort County Board of Commissioners on Monday night. The new fiscal year begins July 1.
That rate is 3 cents per $100 more than he first planned in order to ensure that the county has enough money in reserve in the event the medical center — formerly Beaufort County Hospital — cannot make a $1.57 million debt payment on its expansion, he said.
Spruill’s recommended budget includes the debt payment in a fund designated “Hospital Debt Reserve.”
For some 10 years, the county and the medical center have maintained a relationship whereby the county acts as the borrower of money on behalf of the medical center for various large construction projects, Spruill said.
Bill Bedsole, the medical center’s chief executive officer, in a statement released Monday afternoon, said the medical center “has every intention” of making the required payment.
“Beaufort County Medical Center has never been delinquent in making its debt payments to the County,” Bedsole wrote. “However, the county manager is aware of the impact of the economic downturn on hospital finances and that the resulting drop in activity has negatively impacted the hospital’s cash position. He is also aware that the hospital has every intention of making the required payments by the June 30 deadline.
“The county manager, in full disclosure to the taxpayers, has put a contingency into the initial budget in the event that the hospital would be unable to make the payment by the deadline. It is fully expected that the contingency will be removed before the budget is finalized.”
Spruill also believes the medical center can find the money to make that payment by June 30 — the deadline for the commissioners to set the tax rate — so county taxpayers will not have to bear that burden.
The medical center “has faithfully reimbursed Beaufort County the required debt service associated with this borrowed money,” Spruill said Monday. “I sincerely believe that Beaufort County Hospital will find a way to succeed at certain financial arrangements in the short term that will allow the hospital to reimburse the county for its debt service just as it has for the last decade.”
Without the increase to cover the medical center’s debt, the recommended county budget of $51,974,285 for the 2010-2011 fiscal year is only $194,797, or one half of 1 percent, higher than the current year’s budget of $51,779,488.
Without the medical center set-aside, the budget just misses — by eight-tenths of a cent per $100 valuation — Spruill’s targeted revenue-neutral tax rate of 48.2 cents per $100 valuation.
It is based on a tax base of $5,503,961,852 for fiscal year 2010-2011, for an increase of about 29 percent when compared to the tax base in the current fiscal year.
Spruill’s recommended budget contains good news and bad news for county taxpayers in the upcoming fiscal year and in the future.
“The good news is that the tax rate in the coming year will drop from the current rate of 60 cents to the recommended rate of 52 cents while also opening the door for the elected body to drop the rate an additional 3 cents should they reach a solution to the Hospital reimbursement problem,” Spruill wrote in his budget letter to the commissioners.
The bad news, he wrote, is that the 2010-2011 fiscal year budget will be the last year that the county can use its savings to help balance the budget and, as a result, the property-tax rate in 2011-2012 could rise at least 3.5 cents per $100 valuation.
The recommended 2010-2011 budget calls for $612,682 in what Spruill described as “aggressive cuts” to help offset $916,182 in increased spending including $592,150 for Beaufort County Schools, $198,032 in employee retirement contributions mandated by the state and $126,000 for employee health-insurance premiums.
The cuts include a 5 percent reduction in the staff at the Beaufort County Department of Social Services, which brings that department in line with cuts sustained by other departments during the current fiscal year. The proposal eliminates four jobs at the department, including two that are currently filled for savings of about $135,000.
The department also sustains a cut of $134,000 in foster-care expenditures in the recommended budget as a result of the departmental success in placing foster children in less expensive housing options.
The cuts also include an across-the-board 1.92 percent salary cut for all county employees, which will be offset by five additional vacation days that will be added, one day at a time, to Easter, Thanksgiving, Christmas and New Year holidays and a new Presidents Day holiday in February. That results in a savings of about $182,000. This cut exempts sheriff’s patrol deputies, telecommunications personnel and detention-center personnel.
Spruill’s recommendation also includes a decrease in culture and recreation appropriations of $161,000 because of completing the final payment owed to Agape Dental Clinic in the current year’s budget.
The recommended budget includes only about a third of departmental expansion requestions. It recommends $63,102 for the purchase of three vehicles for the Beaufort County Sheriff’s Office instead of the requested $231,374 for 11 vehicles; $46,584 for maintenance and repairs to public buildings instead of the $201,300 requested; $9,516 for equipment purchases at the jail instead of $44,027 requested; $6,620 for equipment and other purchases by animal control instead of $27,840 requested and $67,718 for equipment and building maintenance for Social Services instead of $120,292 requested.
The recommended budget Includes $13.9 million in funding for the Beaufort County Schools as required by the interlocal agreement and covenant not to sue signed by the commissioners and Beaufort County Board of Education in 2007. It includes $2.1 million in funding for Beaufort County Community College, an increase of 1.4 percent over the current fiscal year.