Ocean View to hike taxes 9 percent

Atop a lengthy agenda of public hearings, Ocean View Town Council cast a 3-2 vote at Tuesday night’s council meeting that will enact a 9 percent tax increase in the town, effective in the coming 2008 fiscal year.

The increase came as a response to recent drop in real estate transfer taxes, and was proposed by the Long Range Financial Planning Committee (LRFPC).

Property taxes are relatively unchanging, while transfer taxes, which help to balance the budget and cover improvements, can vary. Roughly 44 percent of the town’s budget and revenues currently rely on transfer taxes.

“We can’t rely on a moving target,” noted Town Manager Conway Gregory. “When real estate is up, the transfer taxes are there; but when they’re down, they’re down. We’re not generating enough money to cover the budget and capital improvements.”

Without increasing taxes, the town would be forced to scale back on projects, including street maintenance, drainage systems and improvements, and debts. “That only puts us deeper in the hole,” said Gregory. “We need to either pay now or pay later, and it’s only going to get worse if we put it off.”

The proposal brought mixed emotions to the table of the council. “I’m not in favor of any tax increase,” said Councilman Norman Amendt. “It’s not fair to the taxpayers.”

Council member Bill Wichmann shared a similar opinion. “Our reserves are adequate,” he said. “There’s no money we’ll fall short on this year.”

“I agree our reserves are adequate,” said Gregory at Tuesday’s meeting, “but we have no guarantee that in the future, even if the economy rebounds, that it will come back to the level it was in the 1995-2005 period. I think the 9 percent increase is necessary and it’s a wise move, and it helps us remove us from this ‘narcotic,’ of the real estate transfer tax.”

Councilman and Chairman of the LRFPC Roy Thomas, who presented the increase, and said he agrees that it’s not in the interest of himself or the citizens.

“I’m not in favor of this,” he said, addressing the council and public at Tuesday’s meeting, “but something needs to be done.” He proposed that the town needs to either increase taxes, or cut the budget by $500,000 — a hit that the town can not afford to take, he said. “I’m not proud of our budget, but this is a compromise plan. It’s the best we could come up with.”

A recent presentation by the LRFPC had projected the town’s cash reserve to be $400,000 by the end of next year. Three years ago, that number was estimated at $5 million.

Construction for the town’s public works building was originally set at $260,000 and is now at $1.2 million, noted Thomas.

“Next year,” he said, “the town is spending $2.4 million more than it’s taking in. The next year, we’re spending $831,000 more than we’re taking in. That’s considering Fairway Village starts and the housing market turns around.” He also mentioned that there is very little upward potential for revenue over the next years.

“We cannot fund buildings,” said Thomas, “without doing one or the other [raising taxes or cutting expenses]. It’s also important to realize … we are already projecting the deficit of $1.4 million over the next four years. Without this tax increase, we will be facing a $2 million deficit over the next five years. We need the robust housing market to come back but if it doesn’t, we will be short even more.”

He mentioned that recovering later rather than now would forecast a nearly 100 percent tax increase in the future. Even with this increase, the LRFPC reported that the town will never have a balanced budget over the next five years, falling short $1.375 million.

“In theory, I don’t disagree,” said Thomas, “but we can’t have it both ways. I’ve been against a tax increase considerably, but when it came down to this, I think this is the only way we can provide to the citizens, and be fiscally responsible and not cut any services or manpower. This will provide adequate raises and employees with good insurance. It costs money.”