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County Council, May 1

Staff presents a balanced budget, and no tax increase for FY2009
Look out for FY 2010 though!
Warwick Jones

Staff has had its first crack at constructing the fiscal year 2009 budget. The results were presented to the Finance Committee last night, and understandably, it was pleased. For the General Fund, staff projected a balanced budget of $172.1 million, down $1 million or 0.6% from FY 2008 million. In achieving a balanced budget, staff had been mindful of maintaining quality services and including a cost of living adjustment (COLA) of 2.5%. Importantly there was no call for higher property taxes.

Projection of costs and revenues could be too optimistic
However, there were concerns. Recurring revenues for the General Fund had been projected at $168.7 million up $5 or 3% on the previous year. These revenues could prove too high. A 6.1% increase in property taxes to $66.2 million may be too optimistic. Staff has assumed some benefit from the change in the tax calculation following the sale of a home. Because of legislative changes, this may not be possible. It also assumed an addition for fees charged subcontractors working o County projects. But Council had indicated opposition to this fee. There were also uncertainties in relation to the cost of fuel and the running costs the new SPCA Center. The annual cost of this new center was projected at about $600,000 but could be much more considering the increased size of the new shelter.

Reserve cushion maintained
County Administrator Canterbury noted that an objective was to maintain the County's AAA bond rating. In this regard, the budget had 2 full months of General Fund undesignated fund balance ie a 2 month reserve. As he pointed out to Council member McKeown, this was not a bare-bones budget. The reserve balance could have been cut to perhaps six weeks but the Administrator was mindful of the need of flexibility in these economically uncertain times. And he was loath to cut the reserve cushion.

Watch out for FY2010
The Administrator also suggested that FY 2009 may be the last year in which tax rates remain steady. Some large increases in costs will be likely in fiscal 2010. These particularly relate to running the new jail and Consolidated Dispatch Services.

Were more hearings necessary?
Understandably, there was a lot of discussion about the budget. Councilman McKeown suggested that as staff had done such a good job in making its projections, it was unnecessary to hold more meetings of the Finance Committee to discuss specific parts of the budget. Although some Council members complimented the Council member on his diligence in sorting through financial statements, they thought it very necessary to continue to hold the planned meetings. Indeed, it was the duty of Council to do so

Should COLA be on a graduated scale?
Council member Darby suggested that the 2.5% COLA should be replaced by a sliding scale that paid more to the lower paid members of staff and less to higher paid members. He noted how difficult for those at the low end of the income spectrum to make ends meet with rising food and fuel costs. His comments struck a sympathetic chord but Council members disagreed with his proposal. Council member Bostic suggested that the COLA had nothing to do with equity; it was an adjustment to mitigate the impact of inflation. As he and other Council members said, inequity in salaries and wages should be addressed through the planned Compensation Study. Notwithstanding, staff is to run some projections on a graduated COLA.

Spotlight on LPA
Council members Darby and Pryor often have expressed dissatisfaction with LPA, the consultant retained by the County to guide its spending of road projects financed by the half-cent sales tax. The criticism has been largely over the amounts that LPA has received, and its running of a hiring program for Minority and Disadvantaged Business owners – summarized as “too much” and “inadequate” respectively. Since the end of last year, the MBDB program has been brought back “in house” to be managed by the County.

Council member Darby last night spoke again on the issues and showed some of the reimbursement scales that LPA was using. Indeed they were high – particularly for those retained on a part time basis. This reimbursement reflected salary rates or hourly rates where applicable, overhead of 172% and other fees. The Council member also noted that the overhead rate had been reduced to165% after discussions with LPA.

Council to again review contract discussions
We don’t’ have a copy of the Council member’s presentation. We suspect that the presentation did raise some questions in the minds of Council members for Council agreed to revisit the issue of LPA and the contract it had with the Council. The contract was negotiated about 3 years ago after LPA responded to the Request for Proposals issued by the Council. It was one of four firms that applied and was awarded the contract after the negotiations with the committee that comprised largely of senior members of staff, to review the notes relating to these discussions.

Chairman Scott noted that when Council reviewed the material, it would find that the allowance for overhead was a common practice in retaining engineering companies such as LPA. The allowance related to all the other costs of employment, offices, telephones, transport etc. By implication, the charge was not unusual.

Council member Darby asked whether the representatives of LPA cared to respond to his comments. They declined to do so but will at a more appropriate time.

Yet another proposal to cub traffic congestion on Johns Island
Council was clearly not jumping up and down waiting to hear the presentation. But at the insistence of Council member Thurmond, it did and members didn't seem very impressed.

The presentation related to what is called the Sea Island Expressway. The concept has been around for some but abandoned in 1995. The Expressway was suggested as a way to relieve congestion on Maybank Highway where it joined Highway 526 and control traffic on Johns Island. The presentation was made by Paul Roberts, a resident of Kiawah Island and an experienced transportation engineer.

Expressway would cut across Island
Mr. Roberts had reviewed the City and County's plans linking Maybank highway with 526. He suggested that the Expressway (aka Cross Island Parkway) was a better alternative. The Expressway Parkway would link with 526 at the Maybank highway junction and would swing to the east and terminate at the junction of Bohicket and River roads, a distance of about 10 miles.

If constructed, the Expressway would cut 12,000 trips a day from Maybank, River and Bohicket Roads, Mr. Roberts stated. In particular, it would reduce the traffic congestion through the Maybank- River Road intersection. However, the impact would obviously be much greater in future. Based on the projections of traffic flows in 2030, its construction would cut 20,000 trips a day from the Maybank, River and Bohicket Roads. Much of the traffic that was removed would be flowing to Kiawah and Seabrook Islands along the Expressway.

And what of the cost? No estimates were made publicly, and of course much would depend of the cost of the Rights of Way (ROW). Most of the latter would be through farm and forest land. Privately, Mr. Roberts suggested the cost of the road itself could be $60 million. But this would not include the ROWs. And the ultimate cost would be offset by savings relating to widening Maybank Highway. We suspect the final cost could be a multiple of $60 million. We also suspect that Council members thought similarly and this was one of the reasons for their seeming disinterest.

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