4/20/20: FY 2020-21 BUDGET: TOWN COUNCIL LIKELY TO DECIDE YOUR TAX FUTURE TOMORROW. BEACON URGES YOU TO MAKE YOUR OPINION KNOWN.

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Tomorrow morning you will find out about the character, foresight, flexibility, and even the sense of empathy of the five people you have elected to serve on the Southern Shores Town Council when they sit in judgment on the next fiscal year’s budget.

The Town Council will meet at the Pitts Center tomorrow at 9 a.m. for its one and only scheduled budget workshop session. The Town meeting notice advises that this will be a videoconference, and you may join via Zoom or listen by telephone. A maximum of 10 people are permitted to gather in the Pitts Center.

See the electronic-participation instructions at https://www.southernshores-nc.gov/southern-shores-town-council-workshop-meeting-tuesday-april-21-2020-900-a-m/southern-shores-notice-electronic-participation-april-21-2020/

Interim Town Manager/Budget Officer Wes Haskett and Finance Officer Bonnie Swain have submitted a draft budget that shows a deficit of $348,853, with revenues projected to be $5,953,243, and anticipated expenses to be $6,302,096.

This is basically with no growth—except for SSVFD fire services increasing by an estimated $80,000—but with no major cuts in expenses, either.

Is this budget realistic? Unduly optimistic? Not optimistic enough?

Mr. Haskett told The Beacon that he plans to submit a balanced annual operating budget to the Council at its May 5 meeting and to ask for a public hearing on June 1, long past the time that the five Council minds will have been made up.

Mr. Haskett is obligated by N.C. law to submit a balanced budget, but he is not obligated by law to submit one as early as May 5. That is his choice.

State law requires a municipal budget officer to submit the budget, along with a budget message, to the governing board no later than June 1; and the submission need not be at a formal meeting. (See N.C. Gen. Stat. sec. 159-11(b).)

So, if you wish to have a voice in your immediate financial future, and in any decision-making about which Southern Shores town services are considered “essential,” and which projects are deserving of funding, email your comments before tomorrow’s meeting to Town Clerk Sheila Kane at skane@southernshores-nc.gov, with the subject line, “Public Comment April 21, 2020.”

Your comments must be limited to three minutes, when read aloud. You also may comment for up to three minutes live via the chat feature on Zoom.

Here is tomorrow’s meeting agenda: https://www.southernshores-nc.gov/wp-content/uploads/minutes-agendas-newsletters/Agendas_2020-04-21.pdf

The meeting packet (budget is on pp. 3-17): https://www.southernshores-nc.gov/wp-content/uploads/minutes-agendas-newsletters/Meeting-Packet_2020-04-21.pdf

For more background, see The Beacon’s discussion of the proposed budget on 4/16/20.

UNCERTAIN FUTURE, REVENUES

No one knows what the future of the new coronavirus that causes the potentially fatal COVID-19 will be. Not even elite physician-scientists like Dr. Anthony S. Fauci, director of the National Institute of Allergy and Infectious Diseases.

After the current acute phase of this unpredictable severe respiratory disease subsides, will we see it return in a second wave and maybe a third wave? If so, when? September? October? And when it does subside, how will we live? What restrictions will be imposed on us and on our visitors?

Careful public-health planning in tourist areas, where the population is dense—and where the health-care services and hospital capacity may be limited—will be vital to avoiding a resurgence of COVID-19.

The Outer Banks summer vacation season remains uncertain. Considering the trend of COVID-19 cases in North Carolina, it seems unlikely that any vacation home rentals will occur before Memorial Day, but no one has a crystal ball.

Major N.C. newspapers are reporting today that cases in the state continue to double every 12 days. The doubling rate is a key factor for state government officials to consider in deciding when to relax the social restrictions that have been credited for slowing the spread of COVID-19.

Epidemiologists say that no matter what a state’s or a community’s doubling time is, the key is seeing it get longer: North Carolina’s doubling rate, although long, has been steady.

Epidemiologists also warn that case counts may not be the most reliable indicator of how the COVID-19 outbreak is spreading because testing has been hindered by a lack of available tests, swabs, and protective equipment, and by limited laboratory capacity.

With so many unknowns confronting them, how will the five Town Council members assess the unbalanced proposed fiscal year 2020-21 budget that the Town staff have presented, with no recommendations on how to balance it?

At least, Mr. Haskett and Ms. Swain offered no recommendations in the April 15 memorandum that they sent to the Council with the draft budget–electing instead to defer entirely to the Town Council. Perhaps they actually will share some at tomorrow’s meeting.

SOME OF THE KEY NUMBERS

Nearly one-third of the Town’s projected FY 2020-21 revenues are occupancy, sales, and land-transfer taxes.

Mr. Haskett and Ms. Swain have reduced the total for these taxes in the next fiscal year, compared to the current fiscal-year total, by roughly $219,500. Is that enough? Is that realistic? Is the reduction a worst-case scenario? (See The Beacon, 4/16/20, for their monthly percentage reductions.)

Occupancy taxes, in particular, have been strong for Southern Shores in recent years–so strong that the town has had a surplus in revenues that has been carried over to the next fiscal year.

Dare County assesses a 6 percent occupancy tax and distributes a portion of half of these proceeds to Duck, Southern Shores, Kitty Hawk, Kill Devil Hills, Nags Head, and Manteo, in “proportion to the amount of ad valorem tax levied by each town in the preceding fiscal year.” See Dare County Occupancy Tax at https://www.darenc.com/departments/tax-department/occupancy-tax

Ad valorem (real-estate) taxes constitute 52 percent of all projected revenues in Southern Shores in FY 2020-21. In FY 2019-20, those taxes made up 46 percent of all revenues.

Should taxpayers be asked to shoulder more budgetary expenses before the Town significantly tightens its belt?

As you all know, Dare County conducted a property reappraisal this year. The revenue- neutral tax rate (“RNTR”) for all Southern Shores property, according to Mr. Haskett and Ms. Swain, is 0.1958, or 19.58 cents per $100 of property value.

When a reappraisal occurs, N.C. law requires a municipal budget officer to calculate the RNTR, which it defines as “the rate that is estimated to produce revenue for the next fiscal year equal to the revenue that would have been produced for the next fiscal year by the current tax rate if no reappraisal had occurred.” (N.C. law. (Gen. Stat. sec. 159-11(e))

Although N.C. law requires a budget officer to include a statement of the RNTR in the next year’s budget, it does not require a governing board—the Southern Shores Town Council—to adopt it.

If the Town Council keeps the current tax rate of 0.22 (22 cents per $100 value), Mr. Haskett and Ms. Swain say in their memo, revenues would increase by $379,013—enough to wipe out the projected shortfall.

This would mean that our taxes would constitute 56 percent of all revenues. That does not sit well with us.

It also does not sit well with us that the Town staff has not provided an accounting of the funds currently in the undesignated fund balance. How much money is in reserve above the minimum $1.75 million that must be maintained?

The Council freely dips into this fund during a fiscal year by approving budget amendments. An amended fiscal-year budget can look very different from an adopted fiscal-year budget.

How will the Town Council make up the anticipated budgetary shortfall?

Will it increase real-property taxes on property owners, both resident and non-resident, who are already suffering financially because of the pandemic?

Will it halt or reduce all non-essential capital projects and all other non-essential costs? There currently is $662,340 budgeted for FY 2020-21 infrastructure projects.

Or will it simply cover the deficit with unassigned funds?

What philosophy and outlook will it embrace? What foresight will these five people show?

And, finally, the $64,000 question: Will the Town Council approve a much-discussed and much-disputed, exorbitant beach-nourishment project ($14-$17 million) that will be paid for in significant part by increasing property owners’ taxes, starting next year? The financial data for four beach-nourishment plan options are in the meeting packet.

Town Councilman Jim Conners said at the last Council meeting that, during budget deliberations, he would have the word austere “imprinted on my brain.” We hope so.

We support austerity. We also believe in preparing for the worst-case scenario, not the best-case scenario. We believe it is better to be frugal and not caught by surprise.

We support holding the line on taxes, cutting all nonessentials,  and postponing the Town’s “wish-list” of additional budgetary items that are enumerated in the agenda—the chief one being beach nourishment of the entire town coastline.

Our beaches are, and have been for many years, stable. A minimum of a year’s delay on this decision will not hurt. It will help taxpayers and save the Town money.

(The $35,000 budgeted for DEC Associates, the beach-nourishment financial consultants, is an obvious immediate savings, and it’s not the only one.)

Please tell your elected officials what you think. Please ensure that our government is a representative one. Send your three-minute comments to Town Clerk Sheila Kane at skane@southernshores-nc.gov.

Ann G. Sjoerdsma, 4/20/20

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