Jan 03 2019

Isle Of Palms Faces Budget Issues Head On

By Katy Calloway, The Island Eye News Managing Editor

The December 18 special meeting of the Isle of Palms Ways & Means Committee was enlightening to say the least. “Eyes wide open,” is the mantra of several City leaders in regards to the income and expense reports that they spent nearly 2 hours discussing.

The financial reports show a growing deficit between revenues generated by the City and operating expenses related to facilities, insurance and payroll. Retirement expenses alone have increased 68% over the last five years. At the current and consistent trend levels of prior governance, payroll cost shows a 52% increase over 2014 totals by fiscal year 2020.

Currently, City payroll accounts for 73% of total City expense, a statistic that Mayor Carroll believes to be high, describing other cities of similar size whose payroll accounts for closer to 60% of the total budget. According to Carroll, nobody’s current salary is in jeopardy, “We are not going to cut income on anybody we

have on our staff right now, we have great personnel, nobody’s incomes are going to be cut, but going into the future we will be more conservative about what our pay will be.” But the City has been searching for a Town Administrator and a Police Chief for nine months and the compensation package may be back on the table. “It will certainly be re-evaluated what we pay,” said Carroll. “But I’m just one person, we as a council make these decisions.”

In addition to the rising costs of doing business, IOP has a number of critical needs with estimated costs that have been on the funding agenda for years. Highlights include the Public Safety building maintenance at an estimated cost of $3-5M, phase III and IV of the drainage project at a combined estimate of $12M and marina dock repairs at $3M.

Councilmember Randy Bell noted that these “official” estimates are dated and have since increased. “This inherited deficit remains and has since grown with the increase in estimates and the inclusion of marina docks and the Morgan Creek Grill building,” he pointed out.

Then Councilmember Jimmy Carroll, along with Jimmy Ward and Sandy Ferencz had opposed raising taxes and millage fees in the past, which led to Councilmember Bell pointing to the prior administration and stating, “It would appear that the newly elected Mayor and Council have inherited an unsustainable cost/revenue problem.”

Mayor Carroll, for one, has changed his tune. “Randy has opened my eyes to the reality. The way I look at it, we inherited a public safety building that was horribly built, we inherited a drainage problem that is Mother Nature’s fault. Everybody wasn’t always looking into the future and that’s what a government needs to do.”

Councilmember Ryan Buckhannon agrees. Having served 17 out of the last 20 years on IOP’s City Council, Buckhannon understands, “The sentiment from the community has been not to raise taxes, while providing an increase in services. Council complied. We added services, personnel, new programs at The Rec, and now we have to pay for those benefits.”

According to Mayor Carroll the options for solution are limited. “There’s not much we can do to raise this money, except for taxes,” he said. “We can only increase taxes a certain percentage a year, so it’s going to be incremental. Otherwise there would have to be a referendum, and it would fail,” he concluded.

Councilmember Bell believes that when Charleston County reassesses property values in 2020, IOP will have an opportunity to set millage rates at maximum increases, thereby generating $344,000 in additional income per year. Under this scenario, an owneroccupied property assessed at $500,000 would increase IOP’s portion of the total tax bill by $49/year, while a $1.5M property would provide IOP $150/year.

But Councilmember Ted Kinghorn believes raising taxes are not the only option.

While Kinghorn agrees that prior Council did little to alleviate the problem, he too voted against previous budget reform. “I voted against the last budgets because I didn’t think they were creative or innovative enough, different from the other councilmembers,” said Kinghorn.

According to Kinghorn, there have been no original ideas when it comes to increasing revenue.

He blames expense increase in part on an excessive number of civic meetings and micro managing of staff. Both of which contribute to increased staff time, hence increased payroll expense.

Kinghorn’s suggestions include increasing franchise fees, including levying a franchise fee on the Water and Sewer Authority. It then becomes the Water and Sewer’s decision to pass the cost on to consumers.

In the end, Council seems optimistic. “The shortfall is debatable,” surmises Kinghorn, “but certainly manageable.”

 Mayor Carroll’s outlook is more definitive.

“We’ve got some challenges ahead but we have a great, smart council. We’re going into this with our eyes wide open. We’re going to take care of it, but it’s going to end up costing more in taxes.”

The next meeting of the IOP Ways & Means Committee is scheduled for 5 p.m. on Tues., Jan. 15.

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