SOUTHPORT — A coastal town in Brunswick County is facing the budget crunch, prompting its city manager to propose a “shared sacrifice strategy” to shore up hundreds of thousands of dollars ahead of next fiscal year.
After less than a year in the job, Southport City Manager Stuart Turille Jr. was tasked with addressing the city’s $1.44 million deficit in the FY25-26 fiscal year. His recommendations include the following:
- 1 cent increase to the ad valorem tax, currently at 30 cents per $100, generating $164,955
- Reassign the 1 cent of the tax rate going toward the capital fund to the general fund, generating $164,955
- Lowering the cost-of-living adjustment to salaries and wages to 2% and suspending merit increases, generating $413,000
- Pull $698,500 from the $3.6-million fund balance
“Going forward, more development, higher property values, more people and sales taxes, and a future reassessment will continue the upward trend in our revenues,” Turille said at the meeting. “But this is not yet here.”
Not only is this year’s deficit $1.4 million, but the city manager is also predicting a $281,000 shortfall in fiscal year 2026-2027, and with the county’s property valuation still two years away, a surplus of funds without raising taxes or cutting expenses is increasingly further in the distance.
The manager shared this year’s gap in revenue comes from several things affecting all other towns, like high inflation, which is also impacting the debt financing on several of the city’s big ticket equipment items, and increasing costs for competitive salaries and benefits. The general fund also lost $1.2 million when it transferred its water and sewer control over to the county last year.
“But recall the benefits — the water sewer rates were lowered and we saved millions in future capital expenses,” Turille said.
Turille said he met with the city’s various departments already to trim expenses where possible, but the city was faced with over a million needing to be shored up and two years away from the next property valuation. Two administrations were unfunded, including the assistant city manager position, saving the city $225,000.
“All department budget requests reviewed by line item, do every individual item, and nonessential costs were all eliminated due to the hard work of staff,” Turille said.
However, the Southport Board of Aldermen were not completely on board with the city manager’s suggested plan of action. Both Robert Carroll and Karen Mosteller said they were against cutting cost-of-living adjustments, which call for a 2.9% increase this year, and diverting revenue from the capital improvement plan, despite Turille saying there was enough in the fund balance to cover next year’s capital expenditures.
The city manager did look at other configurations to reduce costs, including cutting back on city services, though Turille said the city was already lean, pulling more from the fund balance and moving to a higher tax rate.
Carroll and Mosteller agreed the city should do the latter two, raising the tax rate to something more along the lines of 2% or 3%. A 2-cent tax rate hike would bring in an additional $330,000, while a 3% increase would garner $495,000.
“Certinaly I don’t want to not fund our capital projects because there’s too many, and we’ve worked too hard to try and there’s too much momentum that I don’t feel that would be productive,” Mosteller said.
The two aldermen also questioned the city manager’s long-term model showing revenue would increase in the near future due to growth in the area. Brunswick County is the fastest growing in the state, rising 40% since 2010 to a little more than 153,000 people.
“I think we might be slightly aggressive in our thinking — we’ve seen almost five years of rapid, insane growth from a value perspective,” Carroll said. “From a development perspective, how much longer is that sustainable?
Many economists are predicting a slight slowdown in housing prices and stock over the next five years, but both are anticipated to remain steady or see moderate increases.
Mosteller surmised the hiring freeze suggested by the city manager over the next two years, at least, is at odds with Turille’s reliance on growth of Southport’s tax base; she argued the more people that moved to the city would call for additional staff, particularly first responders.
“There’s no way that our first responders and all of that can stay frozen throughout that process if we’re depending on development, a lot of development,” she said.
However, Carroll did say he thought the city’s merit increase system, which is distributed across the board to all employees, was a little “screwed up.” He thought it should resemble true merit, with deserving employees getting a bonus instead of everyone.
Mayor Pro Tem Rebecca Kelley was less willing to shift reliance on raising taxes.
“I really, really, really don’t want to raise taxes, and I would love for that to be on the record, but I think that I like the approach that the city manager has taken, as far as asking the staff, asking the citizens and fund balance to kind of all come together to balance this budget,” Kelley said.
Carroll scoffed at Kelley’s comment, noting he didn’t want to raise taxes either, nor “steal from capital,” “take away from the employees,” or “rape the fund balance.” However, the city has to come up with the money in some way.
The aldermen also brought back the idea of a prepared meal tax, a 1% charge on meals and beverages at area restaurants. The tax would need approval from the North Carolina General Assembly to then be put forth as a voter referendum, but Kelley pointed out Rep. Charlie Miller (R-Brunswick, New Hanover) was willing to support the city in this endeavor.
Southport explored using this charge in 2023, when a different board of aldermen voted unanimously to request approval from the state government. The money would have gone toward the city’s infrastructure needs. However, it never got through in the General Assembly.
Yet last week, the board seemed all in agreement on going down that path again, noting a resolution asking the state’s approval could be drafted soon.
No decisions on the budget were made , as it was the aldermen’s first go at assesing next fiscal year; its next work session will focus on the city’s capital improvement plan and electric fund.
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