Dare Board hears of $4.3M revenue gap in FY 20-21

As local governments face the realities of lost revenues due to the COVID-19 pandemic, Dare County Manager Bobby Outten briefed the board of commissioners on May 8 about a streamlined spending plan for the 2020-21 fiscal year that will maintain all county services, but include no capital outlay purchases, cost-of-living salary adjustments, bonuses or merit raises.

Adopting a revenue neutral rate following this year’s property revaluation – meaning the county must generate the same revenue from taxes as it did last year – the proposed $107 million budget carries a tax rate of 40.5 cent per $100 of assessed value, representing a 6.9-cent decrease from the current rate.

With Outten telling the commissioners the county is faced with a $4.3 million revenue shortfall for the upcoming fiscal year, he said the losses would be made up through $1.6 million in budget reductions, a $1.9 million reduction in contributions from the General Fund to the Capital Improvement Fund, and the use of an excess of $707,000 from the unassigned fund balance.

Outten will formally present the 2020-21 spending plan at the May 18 Dare Board of Commissioners meeting. A public hearing will be held at the June 1 meeting, with the public able to make comments for 24 hours following that meeting. Commissioners are expected to adopt the budget at their June 15 meeting.

Faced with an anticipated shortfall in revenues from occupancy and sales tax revenues, Dare County is faced with many of the same budget challenges and uncertainties as local municipalities.

“When the COVID pandemic started, it became evident that what we thought we are able to do, we weren’t going to be able to do. So we had to start again,” Outten told commissioners during the May 8 work session.

During his budget briefing, Outten said that almost all the capital outlay was postponed. “We didn’t buy any new cars…any new ambulances. A lot of those capital outlay things, equipment, backhoes, loaders, we are going to use the ones we got for another year,” he said.

While some capital improvement projects will be put on hold for future years, Outten said that projects currently under contract, including the construction of the new College of the Albemarle campus building, Health and Human Services building renovations and the construction of the new OBX SPCA facility will proceed as planned.

As far as department head budget requests, the county manager said the first round of requests before the pandemic hit included almost $3.4 million in new funding, however department heads were later asked to return with flat budgets at or less than the current year’s levels.

County officials, he said, worked off worst-case projections going into the FY 2020-21 budget – which include a potential 95 percent and 85 percent reduction in occupancy tax revenue during April and May respectively, with the county only receiving 50 percent of that tax revenue that it would typically receive in June, and 60 percent in July. Those projections also include revenue losses in sales taxes, building permit fees and interest income.

Noting the ongoing uncertainty associated with the pandemic, Outten said, “We don’t know if we are right or we’re wrong, we’re making the best guess we can from the information we have. If we are wrong and [the COVID pandemic] doesn’t impact as severely as we thought, we can always come back and say that some of the things we had to postpone or not do, we can look at doing them because revenue better than we projected. If it’s worse, we can always look at things in November or December…that gives us six months to slow spending down.”

The proposed spending plan also maintains a 21 percent unassigned fund balance, money available for unforeseen needs like the current pandemic.

“That’s the rainy-day fund and boy, is it raining right now,” Outten noted.