The Price of Liberty is Eternal Vigilance
County Council, March 10
Clouds breaking over local economy
Bond issue by PRC gets the nod
The sun seems to be breaking through the clouds over the local economy. Staff told the Finance Committee at last night’s meeting that Accommodation Tax revenues were likely to be much higher than anticipated when the FY 2011 budget was put together. And as Council members exclaimed, the result should warm the hearts of the County’s municipalities as well as the County’s.
The original FY 2011 budget of the County projected Accommodation Taxes of $8.1 million. Staff is now projecting $9.75 million for the year. The increase reflects the stronger than anticipated visitor numbers, essentially tourists, to the region and the higher patronage of hotels, motels and guest houses.
State regulations limit the use of Accommodation Tax funds. But broadly, their application must be to tourist or visitor related activities or projects. Of the gross total collections, 10% is directed to the Convention and Visitor Bureau. The balance is split, largely by formula, between the County, municipalities, debt servicing relating to specific projects and “Outside agencies”. Distribution to the latter is wholly discriminatory.
After allowing for collection expenses, the Finance Committee was told that a $1.63 million surplus over the original projection was expected for the year. Staff being staff and conservative, thought that distributions to the municipalities should be raised, an amount set aside to restore the Contingency Reserve to 5 % and that the Unobligated Fund balance allowed to rise. Predictably, Council members had a less conservative view.
Staff originally proposed that the distribution to the municipalities should be raised to 75% of normal allocations. This would mean an increase from $618,000 in the original budget, to $1.177 million. But the Committee was unanimous in voting for an even larger increase, to 100% of the normal allocation, lifting the total to $1.569 million. The City of Charleston receives the largest distribution at $768,000 compared to the original projection of $297,151.
Committee members also voted to raise the allocation to the College of Charleston (C of C) and the Citadel. Some years ago, the County indicated that it would contribute $350,000 a year for debt servicing relating to sports facility construction but subject to fund availability. Distributions to the entities were cut in recent years and in FY 2011 were projected at $75,000 each. Staff recommended that the funding for the Citadel is raised to $175, 000 for the year. But Committee members thought it unfair to leave the C of C behind and boosted its allocation to $175,000 also.
Most people should be happy with the Committee’s action. The municipalities will receive an unexpected windfall of nearly $1 million, the Citadel and the C of C $100,000 each, and the Convention and Visitors Bureau $165,000. In a sense, the County reaped no benefit but it was able to add to the 5% contingency reserve and boost the Unobligated Fund balance by $351,000. And there is the pleasant prospect of higher revenues next year.
The Committee was also treated to presentations by Steve Dykes, the director of the County’s Economic Development department and by members of the Charleston Regional Development Alliance. Understandably, there was some back patting in relation to getting Boeing and some of its suppliers to set up in the County, and optimistic sounds about production at the Boeing facility – expected to begin by summer next year. But there was more. Interest in new investment, excluding Boeing related, had fallen in the last two years in line with the harshness of the economy. But there had been a noticeable increase in enquires this year and this presaged an increase in investment in the County. Nobody said they expected it to exceed the near $1 billion of 2009 (including Boeing), but in these times, who could be so optimistic. Last year, investment was estimated at $157 million. In the 2 months of this year, it has totaled $37 million. If this rate continues, and it is our projection not the speakers, investment should top $220 million.
The Committee also voted last night to approve a $30 million bond issue by the Parks and Recreation Commission. The funds would be used largely for maintenance, development and debt servicing. Mr. Tom O’Rourke, Executive Director said that the PRC was sitting on some 10,000 acres. It had to determine its priorities and move ahead with development. He did not anticipate that the PRC would be approaching the Council for a millage increase in the foreseeable future.