Council delays adopting budget, tax rate

Published 11:06 pm Wednesday, June 16, 2010

Contributing Editor

Washington’s City Council was on the brink of approving the budget for the 2010-2011 fiscal year and setting a new property-tax rate during its meeting Monday, but those actions likely won’t come until June 24.
Several council members expressed some reservations about approving the latest version of the proposed budget because they had not had time to fully review it.
Councilman Gil Davis said he was “not comfortable” with the proposed budget that includes several changes made to it by the council in a series of budget-related meetings during the past several weeks.
Davis also said he could not find the position of a chief building inspector in the proposed budget, a position the council had told staff it wanted in the proposed spending plan. Davis said he wanted to pursue that issue.
Councilman Doug Mercer said he wanted to add $18,000 to the proposed budget, with that money being allocated to the Washington Harbor District Alliance to use on projects that would help attract visitors to Washington.
Councilman Ed Moultrie told his colleagues he wanted to restore funding for fireworks on the Fourth of July. There is no money in the city’s budget for fireworks on the city’s waterfront this July 4.
The council indicated it’s prepared to include $10,000 for fireworks in the upcoming budget.
The council also indicated it’s willing to add $4,250 to the 2010-2011 budget to help support the Wright Flight program at the city-owned Warren Field Airport. The program rewards students who set and meet specific goals by taking them flying.
Council members said they will give the proposed budget a final review this week, take any questions about the proposed budget to staff for answers and be prepared to adopt the revised budget and set the tax rate June 24.
Most council members said they are prepared to set the new property-tax rate at 50 cents per $100 valuation. The current tax rate is 60 cents per $100 valuation.
The new property-tax rate, when adopted, will reflect the change in values of real property (land and structures) in the city as a result of the recent revaluation of all properties in Beaufort County, including those in municipalities.
After a revaluation, many counties and municipalities try to adjust their property-tax rates so they are revenue neutral, meaning the new tax rate when applied to the new property values generates the same amount of revenue as the previous tax rate and property values generated.
Matt Rauschenbach, the city’s chief financial officer, determined that the revenue-neutral tax rate for the city in the upcoming fiscal year would be 47.44 cents per $100 valuation.
State law requires that after the city’s budget officer calculates the revenue-neutral tax rate, then he or she increase that rate by a growth factor equal to the average annual percentage increase in the tax because caused by improvements since the last reappraisal.
Mercer renewed his objection to the proposed tax rate of 50 cents per $100 valuation.
Earlier this month, Mercer said he prefers setting the tax rate at 48.56 cents per $100 valuation.
The new tax rate, whatever the amount, will include 2 cents per $100 valuation that’s earmarked to provide revenue for the city’s public-safety capital reserve fund, used to help pay for items such as new public-safety buildings and equipment. Mercer believes that allocation, now at slightly more than $120,000 a year, should be derived from the 48.56 cents per $100 valuation tax rate instead of the 50 cents per $100 valuation tax rate.
The target property-tax rate of 50 cents per $100 valuation reflects city officials’ concerns the city could see some of its revenue sources not generate as much revenue as expected. Mayor Pro Tempore Bobby Roberson has expressed concern that the Beaufort County Board of Commissioners may change the way it distributes sales-tax income to the municipalities in the county. That change could result in those municipalities receiving less in sales-tax revenues.
Also, actions by the General Assembly, now in session, could result in other revenue declines for local governments, city officials said.
Roberson has said the city “might need that” difference between the 50 cents per $100 valuation rate and the 48.56 cents per $100 valuation rate to offset possible loss of revenue from other sources.
Councilman Gil Davis has said not knowing what the county and the General Assembly might do leaves “a lot of question marks” surrounding some of the city’s revenue sources.