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Posted on: April 15, 2020

City cutting expenses as it faces budget shortfall

BEAUFORT, S.C. (April 15, 2020) – The City of Beaufort is cutting expenses as revenues are expected to decline significantly in the last quarter of the fiscal year.

At a City Council meeting conducted via Zoom on April 14, City Manager Bill Prokop and Finance Director Kathy Todd spoke about the challenges facing the City as a result of the COVID-19 pandemic, which has shuttered businesses across country and led to mass layoffs, including locally and throughout the South Carolina.

“The City of Beaufort will be subject to financial strain for the next six to nine months, due to the loss of revenue from our business license tax, accommodations tax, hospitality tax, personal property, permits, etc.,” Prokop said.

In her presentation to council, Todd estimated that the City would have net shortfall of $2.1 million through June 30, which is the end of Beaufort’s budget year. The General Fund, Parks & Tourism Fund, and State Accommodations Fund will be impacted by COVID-19, she said.

Declines in property tax revenue, business license taxes and franchise fees will leave the General Fund with a $1.6 million shortfall.

Significant declines in hospitality tax and accommodations tax collections for the remainder of the fiscal year, plus other shortfalls, will leave the Parks and Tourism Fund with an estimated $648,000 shortfall.

The State Accommodations Fund is expected to be $243,000 below budget.

In response, the City of Beaufort has:

  • Instituted a hiring freeze
  • Cut back operating costs
  • Put all capital projects except stormwater on hold
  • Stopped overnight travel and training (except for police/fire academy training)

Prokop estimated this would save the City $400,000-$475,000 in the current year budget.

The balance will come from the City’s General Fund, leaving the fund with less of a cushion.

“We will be entering our lean months of revenue collections from July through December. Cash will be very tight for us,” Prokop said. In addition, the City will soon be entering hurricane season, another potential drain on the City’s budget.

The City is also facing higher costs for stormwater and facilities maintenance, landscaping, street sweeping, etc. Insurance costs are higher, including a 40% increase in tort insurance, Prokop said. “Our ability to service what we have at the present time will be stretched to the limit and in the next 2-3 years we will have to spend more money getting ourselves back to the level we are currently at.”

Prokop said that the 2020-21 budget, which the City is currently working on, will be smaller than the current year’s budget.

He assured City Council that Beaufort residents can expect that the City will continue to provide its current level of services.

Watch City Council meeting here

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