Ocean View officials plan to keep a close eye on the town’s finances in the next six months, with deep concern expressed during their budget process for the 2009 fiscal year about whether a revenue forecast that includes two large proposed developments is too rosy to be realistic.
“We’re anticipating something that hasn’t happened in Ocean View,” cautioned Long Range Financial Planning Committee Member and local Realtor Marc Grimes at the committee’s March 4 meeting, particularly relating to a residential project where the property hasn’t even been purchased by the potential developer yet and is not yet within town limits. “If it doesn’t happen, we’ll be $900,000 down,” he emphasized.
Though Town Manager Conway Gregory has acknowledged that the town’s 2009-fiscal-year budget and capital expenditure plan through the 2013 year are a “sunny skies forecast,” Gregory said Tuesday, “I recommend that we watch the budget very closely over the next six months, and if it doesn’t develop, I’ll call the committee back early, before November.”
Gregory said the committee at that time, should it be needed, would look at cuts to make in existing budget plans to help make ends meet if revenues don’t meet or exceed budgeted amounts.
“We took Marc’s projections into consideration,” Gregory emphasized, “and we do not project a deficit as large as you do. But we do still project a deficit.”
Gregory noted that in the local real estate market’s boom years between 2001 and 2005, the town had received ever-increasing amounts of transfer tax revenue, jumping up by a half-million dollars between the 2002 and 2003 fiscal years and jumping again by $300,000 in the 2004 and 2005 fiscal years, when it took in more than $1 million in transfer tax revenue.
“We need to be very cognizant of this,” Gregory said.
Finance Director Lee Brubaker said he had looked to the town’s revenue in the 2006 and 2007 fiscal years for a good basis upon which to predict the town’s revenue in the future.
Grimes said he believed 2006’s numbers to be an aberration, with a better number to be found in 2007’s comparatively modest numbers. He noted that only seven houses are currently pending for sale in the town — all of them in Bear Trap. “That’s keeping on track with what we did last year,” Grimes said.
The town budgeted some $660,000 in transfer tax revenue for the current, 2008 fiscal year. By Brubaker’s estimates, the town could come in some $130,000 short of that figure when the fiscal year ends at the end of April. For 2009, the budget calls for $720,000 in transfer tax revenue.
“If we don’t match these projections,” Gregory allowed, “we’ll have to make some cuts.”
Councilman Roy Thomas, who serves on the committee, said he didn’t think the budget should be changed at this stage, but he urged care with potentially overambitious revenue forecasts.
“If we come in at about $720,000, we’re looking at growth of 30 percent over this year,” he said. “We’re planning on around $1.2 million five years from now,” he added, suggesting consideration for the long-term curve of anticipated revenue growth should also be regarded carefully, as it forecasts growth of about $100,000 per year in revenue into the future.
“We haven’t found the bottom yet,” Thomas said of the market. “It hit about $500,000 in 2001. One would think we’ve hit the bottom, but it continues to decline.”
Of the current budget plan, he said, however. “I think it’s the best we can do at the moment.”
Committee member Maureen Nicholson said she would like the town to reconsider not increasing property taxes for the 2009 fiscal year.
“We’re $320,000 short in revenue next year without a tax increase,” she said. “I, for one, would like a tax increase.”
The town has already planned modest tax increases in each of the future fiscal years, from 2010 onward. Thomas also noted that if revenues fail to meet needs, “Tax increases would mount pretty steadily in the following years.”
Committee members voted 6-2 in favor of recommending the proposed budget to the town council, with Nicholson and Councilman Bill Wichmann opposed.
The draft budget, introduced to the town council that evening, will undergo a public hearing and first reading of a related ordinance on March 11. A vote by the town council on its adoption is planned for the council’s April meeting, with a deadline to adopt the budget prior to May 1.
Committee members on March 4 also tackled the town’s required five-year capital budget plan, which includes expenditures in the 2009 fiscal year of $15,000 for the Shores House, $80,000 for police equipment and vehicles, $200,000 for public works, $300,000 for a public works facility, $150,000 for a solution to the town’s administrative space shortage and $105,000 in street funding from Municipal Street Aid grants.
The last, Mayor Gary Meredith cautioned, could potentially drop in the coming years, as the grants are based on a portion of roadways inside towns, as well as population, and Ocean View’s growth is slow when compared to some other towns in the state. That could result in more monies going to growing towns and less to towns like Ocean View, where growth has peaked.
Grimes inquired as to what concept, if any, is in place for the $300,000 capital funding for the town’s public works department. Wichmann pointed to the existing concept that was estimated to cost $1.4 million.
“Can we build a building for $300,000? Yes, but, in my opinion, it would not be a proper building,” he said.
Wichmann referenced a recent suggestion by the mayor that the town consider a phased project for public works equipment storage and offices that would utilize $300,000 in the coming year and plan on a “Phase 2” in a future year.
“I expect it would be more expensive, but I would rather build a two-phase ‘right’ building instead of a one-phase ‘wrong’ building,” Wichmann said.
Objecting primarily to the idea of only $300,000 allotted for such a building, Wichmann abstained from the committee’s vote on recommending the capital plan, which passed 7-0.
“It’s a tough budget, and it’s going to be a tough budget year,” Gregory acknowledged.
Wichmann praised the committee’s work on Tuesday, saying, “This really finally began to get in more of a dialogue.” He recommended the council consider removing their members from the committee, however, to give the citizen experts more control over long-range planning, instead of just the upcoming budget.
The capital plan was also introduced to the council Tuesday evening, and is on the same timetable for adoption as the budget itself.