A new fee or no fee with cuts in services? That is the question!

06 Jun A new fee or no fee with cuts in services? That is the question!

New fee or no new fee? That is the question.

Throughout the year, City Council considers many policy issues. There is none more important than the annual budget which drives what the city does over the course of the year.

City Council will hold a public hearing and first reading on the Fiscal Year 2016-17 proposed budget next Tuesday June 14th at 7 PM. After about $1 million in cuts to departmental requests, we are just under $350,000 short of the required balanced budget.

There are two ways to make up the difference.

One is to back off from maintaining state owned properties: storm water systems, repairing/replacing dangerous sidewalks, trimming grass and removing debris from road rights of way, street sweeping, pruning and/or removal of hazardous trees.

Last year we invested about $700,000 in taking care for state assets because doing so makes our city more beautiful and well kempt.

There are literally millions of dollars of deferred maintenance of state assets looking us in the face. One of the most expensive is to repair/replace the collapsed storm water pipe that runs through a residential lot on Ribaut Road that is causing the bluff to erode and taking the private property slowly into the river. Another is a ditch that has washed out to become the size of a small creek causing a hazard on First Boulevard. Allison Road faces both drainage and safety challenges that will cost $800,000 plus to fix. Fortunately, we received a grant. It  requires a city match but SCDOT has (after five submissions) not yet approved our plans. We also received support from Beaufort County to repair drainage and install sidewalks on Southside Boulevard.

I do not fault the local SCDOT maintenance engineer and his staff because they do not have adequate funding to do their job. They are always responsive to requests even though they often cannot respond because they do not have the money.

The second option is to kick the can down the road on investing in growing public safety needs for which the City is responsible. The City has not engaged additional police officers, funded needed equipment for firefighters or replaced worn out public works equipment since prepared for the great recession.

Continuing to invest $700,000 of dollars in state infrastructure is about to take its toll on the City’s most basic public safety functions. We cannot let that happen.

If I have to choose between the two it is a no brainer to fund our public safety operations and let go of maintaining state assets which will, admittedly, let our city be less beautiful and less safe as we have made them.

Our City Manager and Finance Director have proposed a new “fee” which is the only legal way we can have it both ways. This means that taxpayers will bear the brunt of paying to maintain state assets.

I pretty much know where I am going on this issue, but wondering which path you would you take?

Given recent reductions to departmental budget requests, significant additional cuts are really not an option but we will continue to cut what we can.

Before you make up your mind, please take a few minutes to review some facts that weigh into our path forward.

FACT:  Most residents, natives who come home to visit and tourists tell us that our town is beautiful and well maintained. Do we want to lower our standard?

FACT: The State does not maintain infrastructure, leaving overgrown debris on state owned road rights of way, storm drainage systems failing, cracked sidewalks and potholes throughout counties and municipalities thereby placing the burden of keeping our storm water systems working and our cities beautiful. The State is having such a difficult time finding ways to address major infrastructure projects, it is not likely they will fund maintenance needs any time soon.

FACT:  For years the State does not fully fund what is known as the local government fund (formerly created as Aid to Subdivisions which shared tax revenue with local municipalities) as per the original law. This means money we send to Columbia and rightfully budget because state law says it is due to us is slowly evaporating.

FACT:  The State established a cap on local government property taxes.

FACT:  Though no action has been taken on business license “reform,” pending legislation could cut up to 18-20% of the City’s budget.

FACT: Last year the City invested about $700,000 on maintaining state assets

FACT:  While the city is composed of approximately 13,000 residents, characterized as “moderate to low income” by the Bureau of the Census, we serve about 50,000 additional residents who use our services and call Beaufort home. (I am by no means complaining, because I am keenly aware that residents of the area contribute graciously to our economy by shopping in our stores, eating in our restaurants, working for our governments and complementing our diverse way of life.) It is just a reality that the services provided, not the least of which are public safety, the Chambers Waterfront Park and the many cultural attributes the city brings cost money born by the small population of taxpayers in our city. This makes not only our city but our entire greater community a better place to live.

FACT:  While some believe that revenues from parking fees and fines puts money into our coffers, the reality is that parking fees are kept in a restricted fund to be invested in improving the downtown and helping to build new businesses in the city.

FACT: While some rant that the city makes money on traffic fines they are wrong. Of the traffic fines collected, 70% is raked off the top to go to the state government meaning that after the cost of police officers and the court system, fines against those who threaten the public safety are a cost to the City and do not “make money.”

FACT:  The large majority (between 70-80%) of those who use our roads, if only to pass through to get to other places, get stopped for speeding or have fender benders requiring first responders and traffic enforcement, are not residents of the city. The do not contribute to the costs. (Again not complaining about passers through. Just stating the cold fact.)

FACT:  About forty percent of the real property in the City of Beaufort is not on the tax rolls because it belongs to local, state and federal government agencies, schools and not for profit organizations that require services from the City but do not contribute to the cost.

FACT: Because we have so few large businesses to contribute to our tax base, most of our property tax revenue comes from residential property owners.

FACT: The City Council and staff have put into place programs to grow our tax base, attract businesses and new residences through carefully planned growth that will eventually relieve families from such a large burden of property tax. This takes time.

FACT: By creating a new fiscal culture leading up to and through the recession, the city has saved millions of dollars by cutting costs to the bone while in many cases improving services. Unfortunately, this required kicking some cans down the road, postponing equipment purchases, operating with fewer personnel and outdated equipment.

FACT: Notwithstanding these hard times (not just for the city but for families and other governments), City by Council policy maintains a healthy fund balance for emergencies and growing our credit rating to AA that is the highest level available to cities our size.

FACT:  During the increasing call for a higher level of transparency, the City Budget is currently posting almost in real time, on the City website so that citizens can see what we spend and compare it to previous years. http://www.cityofbeaufort.org/financial-transparency-.aspx

FACT: The city has more aggressively chased and received state and federal grants to pay for capital projects. Currently we have more projects underway, or in the queue, than at any time in our history tapping into our coffers only very small amounts required for matches. This is to say that marina improvements, expansion of a safer mooring field, a day dock, streetscapes, some new sidewalks and smaller projects are not paid for through normal revenues. The Boundary Street redevelopment is paid fully with county sales tax dollars, a significant federal grant and money saved by the city over many years. Furthermore, we have set aside money for a land fund which purchases by partnering with Beaufort County and the fabulous Beaufort County Open Land Trust, properties that provide larger parks and more Beaufort like vistas. Not a penny comes out of the annual budget.

FACT:  While the City of Beaufort and the Towns of Port Royal and Bluffton have petitioned Beaufort County Council for many years to place a local option sales tax on the ballot, from which 71% would by law be required to provide tax credits to property owners while the remaining 29% would be used for ongoing capital improvements, County Council has refused to give the residents of Beaufort County the opportunity to vote on this option. So there is no option for a tax break and additional revenue both on a recurring basis.

Back to the central question about a new fee or no fee?

I firmly believe that City Council has managed your money with care and not risked the city’s future with large unsecured debt. I am also keenly aware of the tight leash the state puts on us, thereby requiring more from us without the resources to pay for it. This puts us at a cross roads where a decision must be made.

While hoping to find additional cuts, and generally opposing new fees, I believe it necessary to explore a proposed “Roads and Public Safety Capital Impact Fee” dedicated exclusively to keeping our city safer, well kempt and beautiful. A fee of $35 per automobile would close the short fall and give us the required revenue covering about half of the expense on state assets, thereby ensuring optimum public safety services within the operations budget where they should be. For the time being we can bare the other half of these costs through operating funds.

While state law differentiates between a “tax” and a “fee” in that a “fee” must be a special fund to be spent on what it is raised for and not mixed in with general operating expenses. At the same time, when we see a fee on our annual tax bill, we understandably consider it another tax. Unfortunately, without the Local Option Sales tax, fees are the only means available through state law to generate extra revenue.

If you look at your tax bill, you will note that you are already charged a “storm water fee” dedicated solely to new storm water projects not the least of which is cleaning up the headwaters of Battery Creek which have become polluted for which federal law requires cleaning without financial compensation. Looking even closer at your bill you will see that the county has other fees not the least of which is a roads fee with dollars used to fix roads in the county that the state will not maintain or repair.

Fees are nothing new. The additional fee in the city, which complements the County Road fee, is not out of order though I am sure some will resent paying what they see is another tax.

The best transparency would be to include these “fees” in our tax structure and be honest about it. But by state law capping our taxes, that is not an option.

My inclination is to support the new fee and hope that it will not have to be permanent because the state will one day assume the burden of maintaining their assets. But we cannot wait for the state.

Some might say, stop Boundary Street Redevelopment. We cannot because those are restricted dollars dedicated specifically for this project.  If we stopped Boundary Street, we would have to forfeit the money.

Others might say, stop buying land to open the vista over Battery Creek.  We cannot because those dollars are in a restricted fund created and set aside for the specific purpose.

I am interested in your thoughts as we approach this consideration for building an even better, safer and sustainable authentic hometown.

Please share your thoughts.