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County Council, April 2

Cut backs looming in allocation of Accommodation Tax funds
Dog days for Animal Society. Property reassessment deferred for a year

Warwick Jones

Financial woes pervaded last night’s Finance Committee meeting. A shortfall in collection of the Accommodation Tax forced Council to look again at its distribution for 2009 and to take steps to reduce expectations for 2010. And the Charleston Animal Society had to put its tail between it legs and make do with less than what it was asking, despite the worthiness of its cause. And then because of the depth of the recession and the weakness of property markets, the Committee voted to delay the property reassessment planned for next year. A reassessment is made every 5 years and is the basis for property tax determination. And then there was the admonition by a member of Representative Clyburn’s staff who suggested that the County be more aggressive in seeking a share of the $35 million earmark for the Representative’s district.

Last August, Council agreed to distribute $10.8 million of Accommodation Tax funds for FY 2009. Some of the funds are distributed by formula and are pre-committed each year. But some of the funds are discretionary. Because of the decline in the economy and a fall Accommodation Tax receipts, it seems likely revenue will fall to a level well below that projected earlier. Staff is now projecting $8.8 million for this fiscal year (to June 30). And then with the sharp fall off in recent months, revenues in Fiscal 2010 will probably fall again. Staff is projecting $8.1 million.

Shortfall looming for this year
Council was to deliberate as to what to do. Some distributions are made as a fixed percentage of revenue collections, such as those to Municipalities and to the Visitors Bureau. So no action in these cases was necessary. And for FY2009, the County made some adjustments in December last to balance the Accommodation Tax budget. But staff estimates a $231,501 shortfall is now likely for the year.

Staff put together some options which can be seen by pressing Download file. Council member Thurmond made some suggestions but they went nowhere as Council members generally decided that because of severity of the likely cuts, staff should check with the recipients of the 2009 grants and the applicants for 2010 as to the potential impact. Did the Charleston Museum need funds for daily operations? Did the College of Charleston have a financial commitment that depended on the distribution? So as a result, Council voted to defer a decision until more information could be gathered.

Should the colleges be included in the recipients?
We confess to some pleasure that the issue is to be readdressed. We wrote harshly about the decision of Council when it made the distributions on August 15 last. The Accommodation Tax is supposed to be distributed to entities that serve the tourist industry. We have no issue with the inclusion of most of the recipients on the list but question that of both the Citadel and the College of Charleston. The money distributed to these colleges was for a sports arena and basketball stadium respectively. Financing had already been arranged and construction under way when the requests were made. Indeed, both requests were made months after the County imposed deadline for applications had passed. More importantly, we question whether funding for these projects from the Accommodation Tax was legitimate. And even if it were, we can think of far more deserving entities drawing tourists to Charleston. As we said in our note at the time, if these entities meet the test, then the roads and sidewalks of Charleston can be financed by the Accommodation Tax because tourists walk and drive over them. And at the present time, the General Fund of the County, (and the City) needs all the help it can get.

Only a small bone for the SPCA
As Charles Karesh the President of the Charleston Animal Society (John Ancrum SPCA) said last night, Council knew that the Society would be back asking for funds. This had been signaled some time ago. The Society had moved in to its new premises in North Charleston about a year ago and needed time to settle in, take stock, and determine its working and capital costs.

Mr. Karesh requested:
• A 50% increase in the monthly fee paid by the County to the Society, from $34,539 to $51,772. As well, he requested a 30% increase in the fees paid by the County for boarding, euthanasia and immunization as well as a new fee for disposing of “road kill”. Although these fees were paid by the County, some were recovered from pet owners and others and passed on to the County.
• A catch-up payment of $224,302 for operating shortfalls from March 1 2008 to June 30 2009
• Additional capital contribution of $1.25 million to defray the expense of the new facility

Mr. Karesh argued eloquently for funds. Nobody disputed the good that the Society did and the important need for its services. And although Council was sympathetic, it recognised the severity of the times. Council voted to accept the fee increases under 1) but only half of the catch up request viz. $112,151. It made no provision for an additional capital contribution.

Some members suggested that the Society try harder to obtain financial support from the community. Council was told that the Society was already moving aggressively and substantial contributions were being made, particularly of kind.

Property reassessment delayed for a year
There were a number of reasons given by staff to postpone the property reassessment scheduled for next year. By law, the reassessment has to be made every five years and is the basis of determining property taxes. Under State statutes, the new assessment must be substantially mailed by July 1 2010. It will be the basis of the tax bill for 2010 payable in January 15, 2011.

However, the law gives the County some wiggle room and it can delay the reassessment for 1 year. And this is what the Finance Committee voted for last night.

The agenda documents outlined a number of reasons for the deferment. They included an inability to complete the assessment in time, a shortage of staff, concern about the present reliability of new software, and the cost of the reassessment in these tight times. There had also been court cases that had changed the interpretation of the millage roll back formula. “A postponement will not solve the problem but it may delay the impact until the economy has improved and allow legislative solutions to the millage roll back formula”.

Public will not believe that values have increased!
But it seems to us that the argument most persuasive was the likelihood of a mass of appeals. The assessment made in 2005 was based on property values in 2003. According to staff, although property values have declined in recent years, they are still higher than 2003, perhaps by 25 % or so. Considering the media attention given to falling property values over the last year or so, citizens will probably regard their new assessments with disbelief, even if the increase is capped at 15%. Not only will there be a mass of appeals, there also will probably be hostility. A delay “may allow for stimulus package and financial system reforms to take effect”.

No member dissented.

“Get more aggressive in seeking funds “
We were a little surprised at the admonishment given to the Council by a member of Representative Clyburn’s staff. He suggested that the County be more aggressive in seeking funds from the $35 million earmarked for the Congressman’s district. Other Counties and municipalities had applied for some of the funds but Charleston County hadn’t.

The comments came at the conclusion of a presentation by staff about some of the grants the County was seeking or it was to receive. Some of these grants were to come to the County but distributed to other recipients such as the $7.4 million to the Lowcountry Housing Trust. Staff told Finance Committee that it was watching closely for opportunities to seek grant money. The Committee also authorized the Administrator to make grant applications without Council approval should a deadline occur before Council could meet to approve the request. The Council also gave this authorization with the understanding that any grant request would come to Council for approval at the next meeting and that such a grant request could be withdrawn

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