Saturday, May 21, 2022

Carolina Beach relies heavily on tourism. How will COVID-19 shutdowns affect its budget?

Like all cities and towns across the region, the Covid-19 outbreak is taking a toll financially not just on businesses, but the government as well. (Port City Daily/File)

CAROLINA BEACH — The impacts of the Covid-19 pandemic have touched nearly everyone in some way. From job loss to sickness, the individual effects are serious enough, but local governments are also facing significant and unprecedented repercussions from the virus and subsequent shutdowns of cities and towns across the country.

Take Carolina Beach, where tourism drives the local economy. From short-term rentals to lines around the boardwalk to buy doughnuts, it’s a highly seasonal town. Like so many other coastal cities, the virus hit just as the town was ready to kick off its busy season (spring break).

Of course, the reason most people go to a beach town is for the beach itself, which was closed by the town as well as the county last month. This was done to help enforce social distancing, and prevent tourists from flocking to the small beach towns in the region from more populated cities, like Raleigh and Charlotte.

Being a beach town in North Carolina, the town is no stranger to disasters, but typically, these disasters are hurricanes. While usually short-lived, the storms can cause shutdowns of the beaches for a week or two, like seen after Hurricane Florence.

However, there is a big difference between hurricanes and a global pandemic. For the most part, the current events taking place are unprecedented, especially in terms of scale and duration. The loss of revenues from things like sales tax, room occupancy tax, and — of course — parking fees are generally accounted for and somewhat minimal when towns close for a few days to recover from storms.

Other costs attributed to storms, like repairing town property and debris removal can be expensive — but as with recent hurricane seasons — much of that money spent can be recouped from the state and the federal government.

Still, coastal towns are perhaps more prepared for disasters when it comes to budgeting compared to inland cities and towns who don’t deal with annual hurricanes.

Carolina Beach Boardwalk Amusement Park, 8:19 p.m. (Port City Daily photo | Mark Darrough)
Carolina Beach Boardwalk Amusement Park, 8:19 p.m. (Port City Daily photo | Mark Darrough)

Town Manager Bruce Oakley said the fact that Carolina Beach town dealt with disaster situations like hurricanes in the past, the town could be, more prepared for other sorts of emergency situations. The town has faced some financial troubles in the past few years, its fund balance is still relatively healthy and the staff has been working to improve that balance.

“Not that anyone was prepared for this but being a coastal town and the local government commission’s suggestion that we carry a bigger fund balance than towns and municipalities inland — that sort of gives us a little help. We aren’t where we want to be on fund balance but it gives us a little cushion,” he said.

The town has set up an emergency fund for this situation and hopefully will get some sort of reimbursements in the future.

As far as how much the Town of Carolina Beach (and other cities and towns across the region) will lose due to the economic shutdown, it is still too early to say.

Oakley, along with Assistant Town Manager Ed Parvin and Finance Director Debbie Hall, has been working to figure out what exactly the impact on the town’s financial health will be.

“It’s still kind of hard to calculate exactly what we’re going to lose, we know we’re going to lose some parking, we’re working on what that will be because we are still optimistic that come mid-May sometime hopefully … that we can start opening some parking lots and start getting some of that revenue,” Oakley said.

There are, of course, other revenues the town will lose due to the Covid-19 closures, like sales taxes and room occupancy taxes, but these make up a smaller portion of the town’s general fund.

As far as what is being done to help stem the revenue losses, Oakley said the town has cut back on its spending, only springing for the essentials right now. Travel and training budgets are another area the town is looking to cut back and save money, he said.

“We’re having to operate tight, I mean real conservative right now just to make sure we don’t have to go into the general fund to make it through and I think we will,” Oakley said.

One of the hardest-hit groups across the country is the small, local businesses that have been forced to shut their doors and lay off staff for this crisis. Oakley said that the town will do everything it can to help local businesses recover when the emergency situation is all said and done.

Parking fees and the park

Parking revenues in New Hanover County beach municipalities are unique when compared to the rest of the state. That’s because there is actually a state statute that allows cities and towns in the county to use revenues generated by on-street parking for almost anything.

In other cities, that is not the case.

State law says that most municipalities who charge for on-street parking must use those revenues collected in specific ways. According to General Statute 160A-301, “Proceeds from the use of parking meters on public streets must be used to defray the cost of enforcing and administering traffic and parking ordinances and regulations.”

It is important to point out that these regulations are strictly for on-street parking, off-street lots’ revenues can be used as general revenue.

In Carolina Beach, for example, the Fiscal Year 2019 — 2020 budget projected $525,000 in revenues just from parking meters, and approximately $1.7 million from parking overall.

That means the parking revenues alone make up about 11% of the town’s annual budget.

Of course, it’s not Carolina Beach without talking about Freeman Park, which is somewhat of an anomaly in North Carolina in that the park allows visitors to drive and camp on the beach — for a fee.

Actually, revenues from Freeman park was more than parking revenues in the FY 2019-20 budget, coming in at $1.87 million.

But the park has seen a plethora of challenges that have contributed to a decline in revenues last year, including lawsuits and closures throughout the year thanks to erosion and tides.

Ultimately, the challenges Carolina Beach faces are not unique to the beach town. Most likely the majority of towns and cities across the nation are facing similar situations, and while it is not a good situation, everyone is in it together.


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