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Town Council’s goals and directives set the tone for the development of the budget. During its annual Strategic Planning Workshop, Council identifies priorities, issues and projects that will provide the direction and framework for the budget.
In June, Town Council adopted a Fiscal Year 2009 Budget that represents an approximately $9,000,000 reduction from 2008. Our adopted budget for 2009 is $72,960,000. The Town serves a full-time residential population of over 40,000 residents as well as 2.5 million visitors annually. Our service delivery systems must accommodate residents and sometimes a daily population nearly three times the size of the permanent population.
Our sources of revenue, in part, are generated by these visitors. In 1994, we relied on property taxes to fund our budget in the amount of 67 percent. Today, we have reduced reliance on property taxes to 32 percent.
Town Council has worked hard to make users of facilities and amenities pay for the privilege rather than sock it to residents alone. We have lessened the burden on resident property taxes by tapping funding sources such as licenses and fees, accommodations taxes, beach preservation fees, hospitality taxes, storm water fees, franchise fees, fund balance and tax increment financing.
The increase in funding provided through these other sources demonstrates the Town’s ability to expand the diversity of its funding sources through the years.
This year, the budget proved to be particularly challenging due to a slowdown in real estate, the building industry, food and beverage, tourism and retail business. When business revenues are down, our revenues are down.
We try to forecast revenues in a conservative manner so as not to be surprised at the end of the year. Our budget is, in many ways, like a household budget. We make an attempt to project what our revenue will be against our expected needs.
A budget represents an annual funding plan which responds to the needs of the Town while maximizing a limited resource of funds. While most needs are identified, some cannot be and we must react accordingly.
One of the best examples of unanticipated costs this year will be the Port Royal Beach stabilization project. We are in receipt of the Port Royal study which projects an $11,000,000 price tag.
As I write this article, I have asked the Town Manager to develop funding recommendations for Town Council to consider as it reviews the Port Royal study. We may have to fund the project from a number of different sources some of which may involve Emergency Reserve Funds that Council has budgeted for over the years. So in a way, while the project costs are higher than one could have anticipated, Council has done a good job in saving for a rainy day. This cost represents just one of the dynamics that impact a budget.
Given the current economic cycle, the Town is not in as good a position as it has been for many years. The Town Manager has kept staffing levels the same for two years running despite the fact that we continue to experience an aggressive Capital Improvements Program and continue to maintain more and more public facilities and amenities.
By nature, I am an optimist and as a resident of the Island for most of my life, I have lived Island ups and downs from economic cycles to the 1980s planned unit development bankruptcies. The Island is nearing buildout which means reduced development revenues and the state has diminished our ability to create new revenue sources and capped our ability to raise revenue. We’ve increased public safety levels of service over the years without increasing property taxes.
We are not immune from national economic cycles. We have always come back from down times and I am entirely confident this current period will pass. Councils job in this environment is to budget conservatively, meet the immediate needs of residents and visitors, and carefully and strategically think about the future.
