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County Council, December 11

Times get tougher!
More cuts to budgets of the General Fund and Accommodation Tax

Warwick Jones

It was a long agenda before County Council last night. Meeting as the Finance Committee, it considered issues over the budget and the proposed allocation from the Accommodations Tax. And then allied to these were the Functional Review reports and closure of a County office in Ravenel.

Nearly every meeting of Council recently has brought home the severity of the times. Since the 2099 budget was agreed to earlier this year, Council has been forced to make changes because of anticipated revenue shortfalls. And after action is taken, it becomes evident that more is necessary to balance the budget.

Another $2 million in cuts need to balance General Fund 2009 budget
Staff told Council last night that it now estimated a $7.5 million deficit in the General Fund based on the original budget projections if no changes were made. Council had reacted to earlier warnings of a potential deficit and already had cut $5.5 million from the budget. But it now seemed that it had to find another $2 million. The issue was from where will it come? And the question lingered, what was going to happen in 2010 if there were no improvement in the economy.

Staff in its presentation noted that Revenue is 2009 was originally projected at $151.7 million. Somewhat surprisingly, property taxes, the main contributor to revenues were expected to rise by $1.5 million over the original projection of $62.4 million. But collections were slowing and staff projected a $1.3 million drop for the year (Property taxes are eventually fully collected but it doesn’t help the County in 2009 if they are collected in the next year or so).

Property taxes were the only bright item for General Fund revenue. The contribution from nearly everything else was down – Federal contributions, Local Option sales tax, State contributions, business licenses, building permits etc. .

Council finds another $700,000 but still some way to go
Staff had some suggestions that Council went along with. These included eliminating the Provision for Contingencies for the rest of the year. The provision was $500,000 for the full year. With no provision for the rest of the year, the County could draw on $250,000. And then there was the elimination of the Compensation Study amounting to $300,000, and the suspension of contributions to staff’s 410ks for the rest of the year. The annual provision was $300,000, so savings for the rest of the year would be $150,000. These together make a total of $700,000. Clearly there was some way to go – about $1.3 million.

Looking at items highlighted by Functional Review
And Council did persevere but the hours grew long and the energy was drained. Some time was spent deliberating over the results of the Functional Review that was undertaken by the County through Committees headed by Council members. There was a long list of possible areas for budget cuts. Discussion generated some heat and few dollars. Council member Thurmond objected to the suspension of the Drug Courts and Mental Health Court. There was little stomach of Council members to disagree. The projected savings for 2009 would have been $82,311 and $44,469 respectively. Then Council moved to the discontinuation of Community Road Maintenance, a potential saving of $284,000 in 2009. And this was debated and a decision deferred to see if savings could be achieved in other areas.

Still about $1.3 million to be found
The savings that were eventually garnered were through an increase in copying charges, $10,737 for this year, and a fee for duplicate tax receipts, amounting to $11,250 for this year. But there was little else. Our math suggests Council still has to find some $1.3 million to balance the budget.

Vice Chair McKeown did not allow discussion on 2010. He wanted to focus only on 2009. But from the figures produced by staff, questions were certainly being raised as to the likely savings that might be necessary to balance the budget next fiscal year. .

Accommodation Tax revenues down 14%
The Accommodation Tax budget for Fiscal 2009 also was modified. Staff showed that revenues were running about 14% below the budgeted $10.4 million and it expected this trend to continue. As the budget for the tax had to be balanced, some distributions had to be cut. Some distributions look after themselves such as those to the Conventions and Visitors Bureau, Municipalities and Cities. There receive a fixed percentage of funds. Others were fixed by contract or agreement.

Draw down in fund balance of $1.05 million
The major reduction was the suggestion to draw down the Fund balance by about $1.05 million. It opened the year at $1.125 million and was projected to end the year at $74,000. As well, $200,000 should be taken from previous provisions for the development of Lawrimore Park as the cost was expected to be much less than originally projected. Staff also recommended that the allocation to a Beach Renourishment Fund be suspended. This saving would amount $111,000 this year. Similar to the budget for the General Fund, the discussion begged the question as to where the cuts would be in Fiscal 2010 if there were no improvement to the economy. Clearly there will be no fund balance of note to draw down. Council went along with staff’s suggestions.

County outpost in Ravenel to remain open
Finally we should mention the George W Tumbleston Jr. Service Center in Ravenel. This center serves the citizens of Ravenel and surrounds. The major part of the Center’s cost - wages and salaries - was borne by the County. Staff recommended in July that the Center close to help the budget. But the locals were upset and the move was questioned by Council members, in particular Council member Inabinett who represents the district.

Despite the long discussion last night and the question asked by Council members, we are unsure of the potential savings given up by the reopening. Cost savings of $30,000 a year from the closure were mentioned, as were other figures. But Council member Schweers was skeptical. Considering the staff numbers, he thought the savings were more likely some $300,000 a year if the closure continued.

Whatever!

A decision was made to staff the Center and to provide County services related to the Treasurer, Auditor and Building Services. Staff did not seem too happy about the conclusion. But it was clearly a political and not an accounting decision. We note that State Representative Brown, who represents Ravenel, was in attendance last night.

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