City considering alternatives to tax increase

Published 7:00 pm Tuesday, April 27, 2021

A proposed 7-cent property tax rate increase for the upcoming fiscal year didn’t garner much support from the Washington City Council during a budget workshop Monday.

This isn’t the first time that the city manager’s office has recommended such an increase. The additional revenue from the proposed adjustment would be used to close a gap of approximately $623,000 in the city’s general fund, and it would also help the city keep pace with operational expenses.

There are other potential options for bringing in that money. But City Manager Jonathan Russell said an increase in taxes will be needed eventually.

“We’re going to have to increase at some point,” Russell said, “because the cost of providing services isn’t getting cheaper.”
Russell added that he understands why some members of Council are against moving forward with a rate increase during the current budget cycle. Mayor Donald Sadler said the city shouldn’t raise taxes at a time when many of its residents are struggling with the effects of the COVID-19 pandemic.

“Even through COVID, the city still appears to be in good financial standing,” Sadler said. “So I would like to look at other options to meet our budgetary needs.”

Councilman William Pitt suggested that the city could move forward with the tax increase but implement it in smaller increments — perhaps 3 cents one year and 4 cents the next year.

“Often times, we think more with our hearts than our heads,” Pitt said. “But it’s important to think with your head, because the City of Washington is a business.”

Council directed city staff to look at other ways of bringing in revenue that don’t involve a tax increase. Russell said there’s a chance the city will be able to use some incoming $2.8 million in federal stimulus money to close the gap and put off tax increase discussions for another year, but that’s not guaranteed because there is no guidance yet on how that money can be spent.

More information will be released within the next month. The city has some time to weigh its options; it has until June 30 to adopt its final budget document.

The city’s property tax rate currently sits at 53 cents per $100 valuation.  In comparison, Beaufort County’s property tax rate is 63 cents.

According to data provided by the city, which tracked local tax rates from 2006 to the present day, both the county and Washington had a 60 cent property tax rate from 2006-2010. Following a revaluation, Washington’s tax rate dropped to 50 cents, and it stayed there from 2011 to 2016. The city increased its tax rate by two cents in 2017 in order to raise funds for a new police station. Following another revaluation in 2019, Washington’s rate climbed to 53 cents, where it remains today.

“I know that it sounds, when you say 7 cents, that the sticker shock of that may be large,” City Manager Jonathan Russell said. “But we only generate $88,000 of revenue for every penny. The gap we’re trying to deal with is $623,000. In a $100 million budget, that’s not that much. But I know the sticker shock of that — we’re not generating millions and millions of dollars.”