5/27/25: THE TOWN MANAGER’S RECOMMENDED FY 2025-26 BUDGET: WE BREAK DOWN SOME OF THE NUMBERS. PUBLIC HEARING IS JUNE 3.

It is easy to get lost in the numbers presented in Southern Shores Town Manager Cliff Ogburn’s recommended budget for fiscal year 2025-26, which begins July 1.

There are numbers for actual, amended, forecasted, and recommended budgets in his report. If you try to verify the percentages in the report’s charts comparing last year’s revenues and expenditures with those proposed for FY 2025-26, you can’t. They do not compute. We had to talk with Town Finance Officer Bonnie Swain to get things straight. (See below.)  

This much is clear: The recommended budget, presented to the Town Council by Mr. Ogburn at the Council’s May 6 meeting, calls for 1) a 4-cent increase in the ad valorem tax rate, which will be imposed on the Town’s revenue-neutral rate of 14.8 cents, and 2) total General Fund expenditures of $11,706,772.

We downloaded the recommended FY 2025-26 budget with the Town Manager’s accompanying report, which was not available before the Council meeting, on May 7. We now find that when we search for the budget on the Town website, we cannot retrieve the accompanying report. See https://www.southernshores-nc.gov/media/12096. Without it, anyone analyzing the budget is at a disadvantage.

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The Town Manager’s recommended budget is balanced by appropriating $227,395 from the Town’s “Undesignated Fund Balance” (“UFB”), aka Unassigned Fund Balance, $3.5 million of which is earmarked for disaster and emergency relief and the remainder of which can be used to balance the budget and pay for large capital expenses. UFB funds also can be transferred to the Capital Reserve Fund for future projects.

Last year’s budget was balanced with $2,918,771 from the UFB, $2.1 million of which was designated for construction of the new Trinitie/Juniper Trail Bridge, which just opened last week.

After deducting $227,395 from the available UFB as of June 30, 2025 to balance the FY 2025-26 budget, $1,787,326 in funds remain above the $3.5 million reserve, according to Mr. Ogburn.

You might ask why some of this “surplus” is not appropriated for the new fiscal year budget, or whether $3.5 million is too much to maintain in reserve for emergencies. The Town Council should be able to answer these questions, but we have not heard them addressed.  

We reported on 5/13/25 the bottom-line balance of the FY 2025-26 budget, and on 4/10/25 we told you that a tax-rate increase of 4 or 5 cents was proposed at the only budget workshop held by the Town Council on April 10.

What more can we say about this proposed budget, which the four Town Council members present at the May 6 meeting—Councilwoman Paula Sherlock was absent—showed both a familiarity with, and participation in its creation?

Indeed, Councilmen Mark Batenic and Rob Neilsen lobbied for the budget and a tax-rate increase. Mr. Batenic said that the Council had been “in touch” with Town staff about the budget and “given [it] some very thorough thought.”  

There was a time, not so long ago, when heads of the various Town departments (Police, Public Works, Planning, Administration, etc.) presented their itemized budgetary requests to the Town Council in public workshop sessions.

Such give-and-take has not existed during Mayor Elizabeth Morey’s administration. As a result, gone are the days when the public could analyze the line items in the budget and question, along with Council members, their amount and inclusion.  

The exception in the upcoming fiscal year is the expense for the salaries and benefits of the agreed-upon number of Fire Department employees, budgetary appropriations that were discussed in the April 10 workshop. (There will be a full-time fire chief, deputy chief, assistant chief, four fire captains, and administrative assistant, and one part-time administrative assistant.)

Last fiscal year’s recommended budget included a very readable summary of itemized expenses by department. It included historical budget data (back to FY 2019) and useful graphics. Perhaps because the FY 2025-26 budget is the second year of a forecasted two-year budget, a similar summary was not appended to this year’s budget. We believe it should have been.

The FY 2025-26 budget is a well-prepared and packaged budget that members’ comments on May 6 indicate already has consensus on the Town Council.

We expect unanimous Council approval of it on June 3, after minimal (if any) comment in the State-required public hearing.  

SECOND YEAR OF TWO-YEAR BUDGET

As mentioned, FY 2025-26 is the second year in a two-year budget that Mr. Ogburn asked department heads to prepare. Hence, if you read the recommended budget and come across figures for the “forecasted” FY 25-26 budget, you now know that those figures were forecasted by department heads a year in advance.

They are largely on the money.

FY 2025-26 is the Town’s first year of incorporating fire services into a municipal department, a “move,” Mr. Ogburn writes in his report, “predicated mainly on the need to provide employee benefits in order to hire full-time positions.”

The recommended budget proposes expenses of nearly $2 million for the Fire Department, which are, understandably, well above what was forecasted when the presumption was that the department would remain a non-profit corporation and largely volunteer-staffed.

Besides the Fire Department budget, the largest forecast discrepancies exist in the Administration and Public Works departments’ expenses. According to Ms. Swain, some of the increases in expenses in the Administration Department are related to the incorporation of the Fire Department (insurance, worker’s compensation, utilities).

Administration also is planning to add a full-time employee in January: A public information officer whose salary will be $63,860, she said.

The Public Works’ budget increase relates to the purchase of equipment, but Mr. Ogburn’s report does not explain how a line-item expense for PW equipment outlay went from $8,000 in the FY 2024-25 “amended” budget to $217,000 in the recommended budget. There is just mention of a “boom flail mower” in his report, but no elaboration.

The amended FY 2024-25 budget includes all additional expenses authorized during the fiscal year that were not included in the budget adopted last June.

We also can tell you, thanks to Ms. Swain, that in order to compare last fiscal year’s adopted budget with the recommended FY 2025-26 budget, she and Mr. Ogburn deducted the $2.1 million appropriated from the Undesignated Fund Balance in FY 2024-25 for the Trinitie/Juniper Trail Bridge replacement project. (Mr. Ogburn explained this at the May 6 meeting, too.)

They did this in order to compare “apples to apples,” Ms. Swain told us: adopted budget to proposed adopted budget. They considered the bridge expense to be extraordinary.

After subtracting the $2.1 million, Mr. Ogburn was able to calculate an increase in the Town’s proposed budget for FY 2025-26 of 9.45 percent or $1,011,063.

Curiously, nowhere in the Town Manager’s recommended budget report is the adopted budget total for FY 2024-25 of $12,795,709, actually set forth.

If that one-time capital expense of $2.1 million is included in the FY 2024-25 budget, then the proposed budget for FY 2025-26 is less than last year’s adopted budget by $1,088,937 or 8.5 percent: the difference between $12,795,709 and $11,706,772.

The itemized totals for the adopted FY 2024-25 budget do not appear in the recommended budget, just the totals from the amended FY 2024-25 budget. We do not understand this. Comparing an amended budget to a recommended adopt budget is apples to oranges.   

We may be the only property owner in Southern Shores to have delved into the numbers in Mr. Ogburn’s recommended budget and, because of our propensity for math, we may have just confused you. We will attempt clarity. The proposed FY 2025-56 expenditures, by all departments, with their percentage change from the adopted FY 2024-25 budget are as follows:

Administration: $1,738,582 (an increase of 18.1 percent); the forecasted figure was nearly $300,000 less

Planning and Code Enforcement: $447,755 (a decrease of 3.07 percent); the forecasted figure was about $6500 less

Police: $2,586,153 (an increase of 3.14 percent); the forecast was for about $2500 more

Public Works: $961,361 (an increase of 28.70 percent); the forecast was for about $225,000 less

Sanitation Services: $1,048,000 (an increase of 5.21 percent)

Ocean Rescue Contracted Service: $237,245 (an increase of 3.49 percent)

Fire Services: $1,982,515 (an increase of 62.86 percent)

The recommended budget also includes $1 million in funding for a “more in-depth road project” on East Dogwood Trail—we have not heard the details explained—and road work coupled with stormwater infrastructure for the intersection of Hickory Trail and Wax Myrtle Trail.

The Town Council has committed $1 million annually over a 10-year period for street improvements. FY 2025-26 is the fifth year.    

Replacement of portions of the existing sidewalk on the east side of Duck Road from Hillcrest Drive northward is budgeted at $335,950.

During their discussion April 10 about raising taxes, Town Council members asked what services the public would have the Town cut in order not to raise taxes and offered up the uninviting possibilities of recycling, chipping, and limb and branch pickup. They intimated that the budget is already bare-bone.

More apt questions for us are whether the Town Manager has tasked every department head with cutting back/tightening his or her budget and whether each one has done so.

Also, why is such a large surplus retained above the mandatory $3.5 million in the Undesignated Fund Balance? With such a large surplus, why is the Town raising property taxes?

COUNTY TAX REVENUES ARE DOWN

 We conclude with a word about anticipated revenues in FY 2025-26.

With the tax-rate increase, Mr. Ogburn projects ad valorem tax revenue of $5,640,771 for the year, which is an increase of 28 percent over the tax revenue projected in the FY 2024-25 adopted budget and in the FY 2025-26 forecasted budget.

This revenue includes taxes paid for beach nourishment in the fifth and final year of the debt service payments for the 2022-23 project, which was budgeted at $11,325,189.

Mr. Ogburn recommends adopting the revenue-neutral tax rates for beach nourishment in FY 2025-26. They are 4.8 cents for municipal service district 1; 1.76 cents for MSD 2; and 2.51 cents for the town-wide rate. These rates “generate the required revenue for the remaining debt service,” Mr. Ogburn reports. He also notes that the Town will begin preparing for a potential five-year renourishment project in the upcoming year.

Mr. Ogburn projects an occupancy tax decrease of 7.86 percent; a decline in sales tax of 2.75 percent, and no change in the Town’s share of land transfer tax. When revenue from those three sources is combined, as it is in the budget line item, the percentage decrease between the adopted FY 24-25 budget and the FY 25-26 recommended budget is 4.8 percent.

All other revenue sources that the Town depends upon, such as monies for permits and fees and intergovernmental revenues (various taxes and grants), are not projected to decline.

OPEN HOUSE IS TONIGHT: The Town’s open house about the Entry Corridor Enhancement Committee’s goals and vision is today from 5 to 7 p.m. in the Pitts Center. Apropos of our budget breakdown, we wonder what budget size and revenue sources the committee has in mind.  

By Ann G. Sjoerdsma, The Southern Shores Beacon, 5/27/25