The James Island Public Service District is holding a public hearing on its 2020 Budget on Monday, May 20 at 6:30 PM in the Conference Room at 1639 Signal Point Road.
Here is a link to the draft budget.
The good news is that the budget proposed to the Commission by District Administrator Robert Wise includes no property tax increase. However, it leaves unchanged the 13% property tax increase from last year. I strongly believe that the Commissioners can and should reverse at least some of that increase.
The budget projects future property tax increases over the next 5 years. The operating millage is projected to increase by 4.5 mils and the debt millage by 3.8 mils for a total of 8.3 mils. The total millage this year is 64.4, so that is an increase to 72.7 mills which is a nearly 13% increase.
Also before the Commission is a hike in sewer fees. The proposed increase next year is only fifty cents per month. It is applied to the base rate and the new CFO said that it was a 5% increase. I think it would be helpful to know the percent increase from the average sewer bill. My bills run about $40 and so 50 cents is a little more than a 1% increase. However, the proposal includes additional increases over the next five years, adding up to more than $5. For me, anyway, that would be a 12% increase over 5 years.
Only the initial increase in sewer rates is before the Commission this year and any further increases will only go into effect if the Commission approves them at future meetings. Similarly, the projected property tax increases will not go into effect unless they are actually approved by the Commission with each future budget.
In my opinion, last year's 13% property tax increase was excessive and so the Commission should reduce property taxes this year. The former CFO told me that when she calculated the needed increase in the property tax and reported it to the District Administrator, he ordered her to add 2 extra mils to what was needed. She has now been replaced by her former assistant.
The Commission and the public were told that the 2 mil increase in the operating millage was necessary to fund increases in salaries for fire fighters because they have had difficulty recruiting and especially retaining junior fire fighters. The 5.5 increase in the bond millage was necessary to fund the replacement for fire station 1. Fire station 1 was supposedly made ineffective due to the improvements at Camp and Folly.
The projected debt service for the new fire station is $414,639. According to the budget, the revenue generated next year from the 9.3 bond millage will be $1,228,140. That is $132,000 per mil. The millage needed to pay interest and principal on the bonds for the new fire station, therefore, is approximately 3.2 mils. That is 2.2 mils less than the increase the Commission and the public were told was necessary. This is very close to the extra 2 mils reported to me by the former CFO.
If we look at the budget proposal from the new CFO, it includes $134,000 of bond millage for future capital leases. In other words, the District plans to continue to collect approximately 1 mil for interest and principle for money it might borrow for equipment it might purchase. They also project a surplus in the debt service of $128,000. That is they are collecting more debt millage than the interest and principal payments they must make. Together this surplus and the "future capital leases" make up 2 extra mils.
As for the operating budget, the District has a policy of paying some portion of retiree health cost. The cost is expected to be $170,000 next year. The Commissioners have been led to understand that the District is obligated to build up a fund to pay this benefit for future retirees. At the Ways and Means Committee meeting last week, the Human Resources Officer told the Commissioners that they are obligated to pay the employer's share of employee health benefits to their retirees. The District's new outside Auditor has been telling the Commission that most local governments cannot afford this and that they need to look at scaling the benefit back. Many Commissioners are interested in reviewing the policy. The District Employee manual shows that the District may pay a part of retiree health cost if the Commission approves and funds are available. So no retiree has actually been promised anything. Further, state regulations do not require local governments like the District to pay any health benefit to retirees. It appears that "staff" has not been providing accurate information to the Commission.
Last year, the Commission contributed $100,000 of taxpayer money to start building a fund to pay future retiree health benefits. The draft budget proposes that an additional $268,000 be added to bring it up to $368,000. That increase is almost exactly 2 mils of property tax, though some of it may be funded out of the sewer fee increase. It is hard to understand why so much is being committed to a program that is not required and may be greatly restricted if not eliminated by the Commission. The Town of James Island does not provide retiree health benefits.
As far as spending on operations, there are modest increases in most areas except Administration where there is a very large increase and fire protection where there is virtually no increase.
Administrative 18.8%
Fire Protection .6% (Yes, that is less than 1%)
Fleet 5.8%
Solid Waste 5.2%
Wastewater 5.1%
That does not seem very balanced and some might question whether this has less to do with District needs and more to do with the Commission being forced to overrule its District Administrator in order to keep our Fire Chief on the job.
I certainly hope that the Commissioners will reduce the bond millage to what is actually needed and also reduce the operating millage at least 1 mil. An overall 3 mil decrease looks very feasible. That would be a bit more than a 4% cut in property tax, reversing approximately 1/3 of last year's excessive property tax increase.
This does not mean that rising costs may not require future property tax increases. The Commission and the Town are working to allow for a Town credit against the JIPSD property tax. We are also working to give everyone in the District an opportunity to return to the Town so that they can benefit as well. Needed legislation passed the SC House this year and will come to the Senate next year. The tax credit plan will allow the other sources of revenue available to municipalities to be used to help fund vital services provided by the JIPSD such as fire protection and solid waste collection.
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