TOPSAIL BEACH — A small island town in Pender County is recommending a 2.5-cent tax increase for its upcoming budget cycle, to replace one-time federal funds no longer available and pay for new long-term plans to improve the community.
Topsail Beach town manager presented the proposed budget to commissioners Tuesday, which would increase the town’s property taxes from 34 cents per $100 valuation to 36.5 cents to reach a balanced budget.
READ MORE: Topsail has a $141M wish list but how will it pay for it?
This would be the second year residents face a tax increase, with a 3-cent hike implemented in the fiscal year 2023 budget.
Topsail commissioners were on board with the plan, noting the added revenue is needed to pay for a new master plan for parks, a financial advisor to guide future spending decisions and increase spending on its water rescue program, to be dissolved from its county counterparts in the next two years.
“How we got to a balanced budget, at only 2.5 cents, was a little creativity,” Shipley said at Tuesday’s meeting. “The first thing we did was sat down with department heads and went through their budgets line by line.”
He said he compared this year’s requests to the last three years of actual spending to cut back in areas not needed, based on what is being used in each department.
Overall, the budget revenues are projected to decrease by 15.65%, about $1 million.
Also to “lessen the blow,” Shipley is recommending funding some additional beach-related activities out of the Beach Inlet Sound fund, instead of the general fund, for $151,000.
Currently at $9.8 million, the BIS fund is protected but unrestricted, receiving its revenues from ad valorem tax, currently 6 1/4 cents. It’s laid out to be used for beach-related expenses, such as maintaining accesses, but also has flexibility in how the money can be spent.
“The idea here is to be consistent on how we fund things based on what it’s used for, and we felt we were splintered on how we fund certain things for BIS and we don’t for others,” Shipley said.
He continued if the money comes from the general fund instead, it would likely result in a 4.5-cent property tax increase, instead of the proposed 2.5 cents.
Recommended funding from BIS includes:
- $8,000 for south end deputies (contracted during the summer months to monitor the parking lot, to not pull duties away from full-time officers)
- $38,4000 for four water rescue employees ($14 per hour for 40 hours/week for 16 weeks)
- $16,320 for two ATV beach patrol officers
- $46,200 for a new pickup truck
- $41,850 for a jet ski, trailer and side-by-side
The town already covers expenses for one of the water rescue staff and the two beach patrol officers; the other items would be new.
“These are all tourism-related equipment or staff proposed,” Shipley said.
Commissioner John Gunter was concerned about buying “capital equipment,” such as vehicles, out of the BIS fund.
“We’re going to pay for it out of the BIS fund, which if you think about it, we’re talking about $9 million, most of that is for the next big nourishment,” he said.
Shipley explained a lot of what is spent from the BIS is reimbursable, following big storms.
Mayor Steven Smith reminded commissioners millions of additional funds are available from the federal infrastructure bill for shallow-draft inlets, to help offset some cost of future dredging projects.
Gunter asked if all the new equipment for water rescue was essential.
“You wish you had it when you needed it,” Shipley responded. “It’s an insurance policy, right?”
Fire chief Bo Fussell explained the necessity of a jet ski, as Topsail does not currently have a vessel that can take on high ocean swells for rescues if needed.
“It would be very beneficial if we took over the ocean,” he said.
Commissioners agreed there are increased visitors coming to the beach and therefore more possibilities for needed rescues.
Commissioner Joe Bell expressed his desire to put an additional half-cent of taxes — which would total $38,000 — into the BIS fund to cover costs to ease flooding, especially as storms have worsened over the years.
“We might not be able to alleviate it, but we can mitigate it some,” Bell said. “It’s hard for me to say we’re going to paint pickleball courts and put grass down but let your houses flood when the water comes in.”
The proposed budget includes $18,000 toward re-sodding the town park, and a combined $12,000 for resurfacing pickleball and basketball courts.
Gunter said he would also support a half-cent increase to funnel directly into the BIS. Shipley said he will look into it and bring up further discussion at the next budget session.
Decreased revenue is coming from a variety of sources. With the Pender County ABC board requesting deferred payouts to the county and municipalities to cover loan expenses for its new building, Topsail is not anticipating any of its normal $20,000 revenue.
ALSO: Pender commissioners table ABC Board’s request to keep more profits until after election
The town also received $136,000 in the one-time distribution of American Rescue Plan Act money. As well, a $10,000 Covid-19 grant for the fire department and a $360,000 Safer grant — for fire departments to increase or maintain staff — helped cover expenses last year but are not applicable in this upcoming budget.
While new positions were created from the grant, the town must now find ways to cover them through the general fund.
In September, the town purchased 802, 804 and 806 S. Anderson Blvd. for $1 million, leading to an annual $104,340 loan repayment.
The property is slated to be the future home of a new fire department, though preliminary estimates show construction costs could exceed $10 million. In the meantime, the town is considering using the lot for paid parking. A vote by commissioners will be held May 10.
However, some sources of revenue are anticipated to increase, such as ad valorem taxes by 10.5%, accommodations taxes by 16.5%, county option 4 taxes by 10%, boat slip rentals by 9%, zoning and fees by 27%, and merchandise revenue by 20%.
Shipley also mentioned interest income in the general fund saw a 400% hike.
“I also wanted to point out, we base all our numbers on a collection rate of 98%,” Shipley told commissioners.
Meanwhile, the town has historically had improved rates — 99.5% or above over the last five years and at least 98.56% in the last 12.
“But we budget at 98% flat,” Shipley said. “We’re being conservative and that’s a good move. I don’t want to rock the boat.”
If he were to bump up estimated revenues by a half-percent, it would only account for an additional $12,000.
Also included in the proposed budget is a 5% cost-of-living salary increase for town staff, though Mayor Smith asked staff to consider a merit increase as well.
“At our initial budget retreat, we were sitting there counting pennies and up to 6 or 7 cents [of a tax increase] at one point,” Shipley said. “Now here we are with some tweaking and shuffling, but we’re at 2.5-cents, plus maybe a half-cent.”
The board of commissioners will hold two more budget sessions, May 3 at 2 p.m., and May 17 at 9 a.m. Meetings are held in town hall, 820 S. Anderson Blvd and livestreamed on the town’s website.
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