MOUNT PLEASANT — Town Council is considering its first tax increase in 15 years because its one-time rapid growth has slowed to a snail's pace.
The new proposed levy would add $50 to the annual tax bill for a $400,000 home. Taxes also would increase by $10 for two cars with a combined value of $25,000, said Town Administrator Mac Burdette, who submitted the budget to council. Stormwater fees would rise from $18 to $30, he said Thursday, making the total about $1.5 million.
Council members expressed reservations about raising taxes in the next budget year, which starts July 1, but some said they would consider it later.
Council Finance Committee Chairman Billy Swails said the approximately 7.7 percent proposed tax increase will be discussed at a committee meeting at 9:30 a.m. April 28 at Town Hall. After that, it would need to go to council. "It certainly needs to be studied more. That's certainly not chiseled in stone," Swails said.
Committee member and Mayor Pro-Tem Kruger Smith said he is not opposed to a tax increase but does not favor one now. "You try to tighten your belt the first year," he said.
The new budget is based on expert projections that tough economic times are ahead in the next few years because of a four-year trend of falling revenue. The tax increase would help offset lost revenue because of a sharp downturn in new home construction, Burdette said.
"The biggest industry in Mount Pleasant is construction," Burdette said. In 2000, the town issued 1,200 permits for single family homes. In 2009, it expects to lose major revenue because it will likely issue 250 permits, he said.
Without new taxes, the town general fund balance could drop from its current $9 million surplus to a deficit of $404,720 by fiscal year 2011-2012, Burdette said. Those figures do not include an $800,000 cushion the town maintains in the general fund, he said.
Councilwoman Thomasena Stokes-Marshall said the town faces new expenses, such as a stormwater management program mandated but not funded by the federal government. With construction sharply down, the town will need new revenue, she said.
"Nobody wants to hear about taxes being increased," she said. "We may be able to avoid it this year, but the reality of it is we need to let residents know that we are incurring these expenses."
Councilman Joe Bustos said he is opposed to a tax increase. "I've already come out against it. If we need to move some projects back and do some things to avoid that, then we should," Bustos said. Major projects, such as widening U.S. Highway 17, should not be touched, but others, such as improvements to Hungryneck Boulevard, could be delayed, he said.
Councilman Gary Santos said he doesn't expect there will be a tax increase in the next budget. "I think we can get through the year without it, and then we'll look at it really strong the next year," Santos said.
The building permit allocation program council implemented in 2000 to control growth has reduced the general fund revenue by about $6 million, Burdette said. Double-digit growth has slowed to around 1 percent. Recently, council suspended the program until growth rises above 3 percent.
Budget planners must balance projected lower town revenues against 4 percent inflation and higher prices for fuel and electricity, Burdette said. The 2008-09 proposed $51.1 million budget is 5 percent less than the current year budget. If approved, employee raises would be cut from 4 percent to 2 percent. Only one new employee would be hired. Usually, the town pays cash for 25 new police cars annually. In the proposed budget for next year, only 17 new police cars would be bought.
"We have got an incredibly conservative budget," he said.
Ongoing construction such as Memorial Waterfront Park won't be affected, he said.
The budget starting July 1 calls for the town to dip into its general fund for $1.5 million to make ends meet.
While the next fiscal year won't be a problem, without new taxes the town could be looking at serious projected revenue deficits starting with the 2009-10 budget, he said. The budget three years from now is what Burdette said he is "really, really worried about." If the town waits until 2010 to try to fix the problem, it may be too late, he said. "If we're right and we don't take steps, we've got a serious situation in 2012," he said.
"We are doing this budget in relation to the next two budgets. We're cutting this budget in anticipation of what's coming," he said. "Even if the economy turned around by July 1, 2009, we wouldn't see positive results until 2010. We don't see the economy turning around by July 1, 2009," he said.