Beaufort cuts expenses as it faces $2.1M budget shortfall

BEAUFORT, S.C. (WCSC) - The City of Beaufort is cutting expenses over expectations that revenue in the last quarter of the fiscal year will drop significantly.

The COVID-19 pandemic, which has shuttered businesses across country and led to mass layoffs, including locally and throughout the South Carolina, is expected to leave the city net shortfall of $2.1 million through June 30, which is the end of Beaufort’s budget year.

“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.,” City Manager Bill Prokop said.

He made the comments during a Tuesday City Council meeting conducted via Zoom.

In her presentation to council, Beaufort Finance Director Kathy Todd said the city’s general fund, Parks & Tourism Fund, and State Accommodations Fund will be impacted by COVID-19.

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 to $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, he said.

“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 Beaufort’s 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 two to three years we will have to spend more money getting ourselves back to the level we are currently at,” Prokop said.

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.