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Myrtle Beach looks for cuts in budget

Last year, it was about holding the line. This year in Myrtle Beach, it's all about being stingy.

Cutting Myrtle's Market, buying fewer books for Chapin Memorial Library, fewer hours at the recreation centers, putting off replacing police vehicles, reducing overtime, freezing vacant positions and axing the merit bonus program that was implemented last year to replace city employee raises are all part of the budget proposal for 2010-2011.

Turning Myrtle's Market into a private enterprise, city manager Tom Leath said, would save the city about $23,000 in advertising, utility and employee costs. The budget recommends forgoing the Fourth of July fireworks display at BB&T Coastal Field to save $31,000, raising stormwater rates by 75 cents to $5, adding 5 percent to solid waste collection bills and implementing a $3 per space per day parking fee at the Myrtle BeachConvention Center.

City Council members said the Oceanfront Merchants Association's annual fireworks display at the Second Avenue Pier could become the city's official display, considering the $85,000 the city gives OMA each year to pay for the show.

"And now you have a beautiful venue, the boardwalk, from which to watch the fireworks," Leath said.

On opening night of the Myrtle Beach 2010-2011 budget retreat, budget director Michael Shelton told the council the proposed budget calls for no property tax millage increase, but the city is going to have to make some tough decisions.

When one City Council member asked whether the proposed $3 parking fee at the convention center would apply to residents, who normally get free parking at meters throughout the city, Leath said, "You cannot continue to give everything away to the residents."

The city manager's proposed budget for 2010-2011 is about 5.6 percent smaller than the current year's budget - after adding in what the city will take in from the 1 percent tourism-related sales tax, money that will be used to replace the 90 percent property tax credit being given to resident homeowners. Overall, it's $136.8 million, down from the current year's nearly $140 million budget, though it does include some increases, such as staffing at Grand Park, an expanded sports-tourism budget and an expanded special-events budget using the 3 mill increase passed in 2008 for re-marketing the month of May after the city pushed away the motorcycle rallies.

Myrtle Beach is on the way out of a long, deep recession, Shelton said in his presentation, normally entitled "What Is Money?" but this year entitled "What Was Money?"

He said the recovery period is going to be long and slow, too, and warned that people should not expect things to go back to the way they were in the mid-decade, during the building and housing market boom.

"This is a year unlike I've ever seen in my career," Shelton said.

The problem is a major decrease in hospitality and building permit revenue since late 2008 - when the nation's economy began going south.

Between 2002 and 2008, Shelton said, the building permit revenue nearly doubled from its normal 10 percent of the city's budget because of Grande Dunes and the "onslaught" of oceanfront hotel and condo development and redevelopment.

"That's the bubble," Shelton said.

"Those graphs don't frighten me, do they frighten you?" Councilman Phil Render asked Shelton. "The abnormal time is during that bump."

Shelton agreed, saying that in normal years, building permit revenue made up about 10 percent of the city's income.

Part of the problem with hospitality fee revenue, Shelton said, is that the Myrtle Beach Convention Center Hotel is unable to pay its lease, meaning a loss of more than $1 million for the city. Shelton said that means debt service is the first priority, which means less money to transfer into the general fund and other areas.

"We have 2007 revenue with 2011 expenditures, and we don't have the budgetary flexibility we have had in years past," he said.

The good news, Shelton said, is that it seems the city is coming to the end of the recession, though its effects will be slow to leave.

The city's strengths, he said, are the location, the value of the resort and the resources the city has for promotion because of the 1 percent tourism development sales tax.

But its ability to recover is tied directly to consumer trends. The signals on that front, he said, are mixed. Consumers have become more thrifty, but 40 percent of those asked in recent Nielsen survey said they do plan to spend more money on travel and vacations in the coming months.

The city operates conservatively under Shelton's budget department, and he has been eerily accurate with his fiscal predictions. The council has, over the past year, repeatedly thanked him for both of those attributes because it has been able to keep close tabs on its finances.

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