Charleston City Council Budget Workshop 2025-11-10

City Council convened for a budget workshop to review the draft 2025 and 2026 budgets, focusing on Tourism Fund allocations, General Fund revenues, and a contentious discussion regarding employee compensation. While the proposed budget includes a 2% cost of living adjustment (COLA), significant deliberation ensued regarding the feasibility of increasing this to 3%. The majority of the discussion centered on funding methods for the additional 1% COLA, with options including a 0.8 mill property tax increase, a reduction in the Local Option Sales Tax (LOST) credit, or cuts to new programs and one-time revenues.

Consent Calendar

• No formal consent calendar items were presented or voted on during this workshop session, as the meeting was designated as a discussion and deliberation period.

Public Comments & Testimony

• No public comments or testimony were recorded during this session; the meeting proceeded with Council members and administrative staff.

Discussion Items

• Tourism Fund Budgets:

  • Staff projected State A-tax revenue at $11.6 million for 2026, noting a leveling off of revenues.
  • Proposed allocations include contributions to the CVB, transfers to the General Fund, debt service, and specific capital projects: Bertle Bank Park Boardwalk, Riverfront Park hardscape renovation, and $2.5 million for the Ashley River Walk.
  • Hospitality fee funding covers contractual management agreements with multiple museums and cultural organizations, police salaries for the entertainment district, and the Lockwood Drive Knee Wall project.
  • Councilmember Waring clarified the Knee Wall project covers the area from the Army Reserve to the Variety Store, with a total approved two-year budget of $5 million ($2.6 million appropriated in this draft).

• General Fund & Enterprise Fund Budgets:

  • Revenues: General fund revenues are projected to increase by $26.7 million, largely driven by property taxes, business licenses (up $5 million, partly due to new sub-classifications for short-term rentals), and local option sales tax.
  • Expenditures: Increases are attributed to public safety (15 additional firefighters), cultural operations, debt service, and a $2 million transfer for the Lockwood Drive Knee Wall.
  • Parking & Hotel Fees: Council queried recent increases in hotel parking fees (raised from $20 to $30 per night) and business license subsidies. Staff confirmed the $5 per space increase has boosted revenue and hotels are passing costs through to consumers.

• Compensation (3% COLA) Debate:

  • Proposal: To fund an additional 1% COLA (total 3%), an additional $1.7 million in revenue is required, necessitating either a 0.8 mill property tax increase or a reduction in the LOST credit.
  • Councilmember Parker: Expressed strong support for the 3% COLA, noting the impact on public safety and sanitation workers. She argued the tax burden would be minimal for primary residents (4% assessment) but noted second-home owners and businesses (6% assessment) would feel it more.
  • Councilmember Waring: Argued against using recurring debt instruments for one-time needs but acknowledged the need to support morale. He suggested utilizing the law school settlement or Port-related TIF revenue but warned against relying on non-recurring funds for a recurring expense.
  • Councilmember Seekings: Noted the discrepancy between Charleston and Berkeley County net millage rates and suggested that utilizing LOST credit could help balance the effective tax rates between the counties, though he expressed concern over the lack of faith in legislative solutions.
  • Councilmember Callahan: Suggested cutting new programs or one-time expenses rather than raising taxes or adjusting LOST, arguing that the city has already made significant sacrifices regarding office space and parking to secure future TIF revenue.
  • Proposed Compromise: Council members agreed to proceed with the 2% COLA as the official advertised budget but task the Budget Office to find the $1.7 million gap through cuts to new programs or one-time revenues (e.g., Law School settlement, Port TIF funds) to fund the 3% COLA by the first reading.

Key Outcomes

• Budget Advertisement: The City will advertise the draft budget containing the 2% COLA to the newspaper on Wednesday, December 10 (per transcript timeline), to be presented at the first reading on December 2nd.
• Action Directive: The Budget Office is directed to identify approximately $1.7 million in funding sources (via cuts to new programs or one-time revenues) to support the 3% COLA proposal.
• Next Steps: A detailed breakdown of the funding gap and proposed cuts will be prepared for discussion during the first reading of the budget on December 2nd. No final vote on the 3% COLA was taken during this workshop."}