A tax increase could be on the horizon in Surfside Beach.
Town Council started looking at ways to increase revenue in a budget workshop Tuesday afternoon, where Town Administrator Micki Fellner said a tax increase is the most logical option.
Council members made no decisions Tuesday to officially raise taxes. Council members did make cuts to the town’s draft budget that included eliminating raises for employees.
Town officials have until the end of June to adopt a budget for the 2013-2014 fiscal year, which requires two votes. The town has not held a first reading of the budget.
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Fellner told Council members Tuesday there is no undesignated money reserved in the budget for an emergency or storm, and said that while there are five options to increase revenue, a tax hike is the most logical. Other possibilities include cutting services, generating new revenue streams, annexing property along the business corridor and increasing fees for permits, fire inspections and business licenses.
Staff is looking into increasing fees and is comparing the rates to similar municipalities in the area, she said, but cutting services is undesirable. She said finding new revenue streams and annexation of property take time and planning to implement, meaning the town likely wouldn’t see benefits in the next fiscal year.
In 2012, Surfside Beach had the second lowest tax rate of all municipalities in Horry County at 40 mills. Only North Myrtle Beach had a lower rate with 38 mills.
Taxes could be increased by as much as 9.9 percent or 3.96 mills, Fellner said, which would be $16 per $100,000 of house value.
Mayor Doug Samples was the only Town Council member Tuesday to give an opinion on a tax hike. He said he wasn’t in favor of it, but was willing to discuss it.
During the Council’s budget retreat last month, Councilwoman Mary Beth Mabry was the first to broach the subject.
“We can’t run this town on 40 mills,” she said. “We just cannot continue to go on this way and provide the level of services we do. Our fund balance is dangerously low ... we’ve got to bring that fund balance up. We can’t do it unless we make some tough decisions.”
She said the budget proposed by staff is already lean.
“You can’t keep getting lean budgets and expect to make $100,000 in cuts that aren’t there.”
Resident Tom Dodge argued the town is actually talking about two tax increases this year because millage previously dedicated to stormwater expires.
“June is the sunset of the five mill fee on stormwater. This June. Next month,” he said. “If we do not put that five mills back in, that means our tax base goes back down to 35 mills because that is a sunset of the stormwater tax.”
Fellner said the town’s attorney and a representative with the Municipal Association of South Carolina disagreed with Dodge’s concern. She said the millage rate doesn’t revert after the expiration of the stormwater designation.
At last month’s retreat, leaders agreed they wanted to give employees a raise. The budget initially included funds for a 3 percent salary boost across the board, excluding any department heads. Tuesday, however, Town Council voted unanimously to skip a pay increase this year.
“I just learned our financial situation was probably tighter than I first appreciated,” Samples said. “The town has been good to employees even when others weren’t and I think part of the reality is they’re going to have to bite the bullet.”
Councilwoman Ann Dodge said she didn’t like it, but agreed.
“We need to do what we have to do to keep the town afloat,” she said. “I don’t mean to be dramatic, but that’s the case.”
Town Council also voted to eliminate $50,000 that had been set aside for a proposed facade grant program not yet implemented.
The program, according to Planning Director Sabrina Morris, would have partially reimbursed business owners in town for making exterior upgrades to buildings to fit the new overlay district requirements.
The idea, she said, was to improve the appearance of the commercial district in town.