Charleston to dip into reserve funds

Charleston plans to dip into its fund balance for more than $2 million, trim expenses, and give no raises to its higher-paid employees in 2009 in order to deal with what's expected to be the city's first drop in revenue in decades.

There will be no tax or fee increases next year, but the city does plan to raise the cost of parking tickets at expired meters from $8 to $14. The ticket increase will raise money, but city officials said the increase is mainly intended to encourage people to use parking garages.

In contrast to the city's 2008 budget, which raised spending more than 7 percent and contained the first property tax increase since 1999, the nearly $147.7 million budget proposed for 2009 would hold annual spending to an increase of less than half a percent.

Revenue is expected to drop by about 1 percent, led by double-digit declines in state aid, tourism revenue and building permit fees.

The city plans to make up the gap by taking just over $2 million from its fund balance, which is a roughly $18.3 million reserve fund meant for emergencies such as hurricane recovery.

Mayor Joe Riley said he would have preferred not to dip into the fund, but that a tax increase was out of the question this year.

He said this is the toughest budget he's seen in 33 years as mayor, and the decline in the economy during just the few months since budget preparations began has been "traumatic."

The city has scrapped plans to hire more Recreation Department employees in 2009 but still plans to hire four Police Department civilian workers and add a dozen new firefighter positions. The positions will likely not be filled until the end of the year, to keep most of the payroll cost off the 2009 budget books.

Current employees will get some of the lowest cost-of-living increases in memory, as the city struggles to contain spending. The lowest-paid employees will get raises of 2 percent, with raises declining as salaries rise. Police and firefighters will all get 1.5 percent raises, but otherwise no one earning more than $60,000 will get a pay increase.

Riley, whose $149,000 salary was set by a 2006 ordinance and was slated to get a 3 percent raise in 2009, said he'll return the amount of his raise to the city. Council members are paid $15,000 and were not slated to get a raise. Riley called the raises that city employees will receive "exceedingly modest" and said he's disappointed the city couldn't afford more. The city has the equivalent of 1,660 full-time employees, and the raises in the proposed budget will cost the city $870,000.

"This time will pass, and we will be back on an upward economic path," Riley predicted.

Council members generally applauded the spending plan because it avoids layoffs and tax increases, although the parking ticket increase generated some discussion.

Councilman Tim Mallard asked if there could be different fines for tourists and residents, with residents paying lower amounts. He was told such a plan would almost certainly be unlawful.

Councilwoman Deb Morinelli didn't question the ticket increase but wanted to know why City Council members can't park for free at the Charleston County garage near City Hall, where many spaces are reserved on the first floor for county officials.

"We need to have special parking on the first floor of the county garage, just like the county people have," she said.

City Chief Financial Officer Steve Bedard told Morinelli that city employees on official business can park free at city-owned garages, but the city has no control over the county garage.

City residents who recently opened their property tax bills, which are due in 2009, could be excused for thinking the city raised taxes for 2009.

The bills that were mailed out about two months ago show a higher tax rate for Charleston than before, but that 4.5 percent tax increase was approved a year ago, for the city's 2008 budget.

Unlike the state and federal governments, Charleston County, and the Charleston County School District, the city of Charleston operates on a calendar-year budget, so the property tax increase City Council approved in 2007, for the 2008 budget, shows up in tax bills issued in the fall of 2008 and due in 2009.

Reach David Slade at 937-5552 or dslade@postandcourier.com.