Budget Message Fiscal Year 2023

William A. Prokop, City Manager

City Council Members:

Stephen Murray, Mayor

Mike McFee, Mayor Pro Tem

Philip Cromer

Neil Lipsitz

Mitch Mitchell

City Manager's Budget Message

May 10, 2022

To: The Honorable Mayor, Members of City Council and Citizens of the City of Beaufort:

The challenges that the City, county, state, nation, and the world have faced with in the last few years have been unprecedented, from the impact of the Covid-19 pandemic to the war in Ukraine. We are so fortunate that the City continues to grow and thrive despite the uncertainties and stress we have all faced during these trying times. The initial shelter-in-place mandate and the extended stay-at-home order affected many activities and required the wearing of masks and the shutting down of schools, businesses, and leisure travel. While the change was swift and significant, our staff responded immediately and pivoted quickly to continue our high-quality services to our community. I am so grateful for and humbled by the generous and unstinting response to the demanding and increased workload by both our staff and our Council. We transitioned our operations in ways that could not have been previously imagined, including moving our public meetings online, providing planning and permitting services remotely, and connecting with our community through social media channels. Our dedication to our community never wavered. I thank everyone for responding to our challenges with such grace and strength.

I am pleased to present the City’s 2023 Proposed Annual Budget, the annual financial roadmap for the City of Beaufort, with projected total expenditures of $27.5 ml and a milage recommendation of 78.2.

The Annual Budget allocates resources to a variety of City priorities and programs to ensure the community’s physical security, enhance our quality of life, and maintain and develop the City’s facilities and infrastructure. The 2023 Budget attempts to reinvigorate these efforts, after the necessary constrictions of the pandemic. Our finances continue to be stable, Beaufort continues to be a center of innovation and growth, and there are many exciting projects planned with several of our community partners. However, the need for us to continue to tackle nuts and bolts issues such as maintaining and strengthening our infrastructure has necessitated changes and the reallocation of expenses and resetting of priorities.

While the City benefits from the fact that we are the regional retail provider serving a population that comes from far beyond our city limits, being that center means that we must also provide services to that wider community. As both the City and the surrounding areas continue to grow and flourish, we must use our resources strategically to guide and support that growth. While reducing expenditures is an efficient short-term measure during times of uncertainty, targeting investments in our Strategic Focus Areas to respond to our evolving community is the long-term solution to build resiliency. Balancing short-term response and long-term investment remains a priority for our staff and Council. I am confident that this focus will guide us through this challenging time and make Beaufort stronger than ever before.

Our FY 2023 proposed budget:

• Builds on our successes, addresses emerging issues, and maintains core services;

• Supports those who need help the most and promotes equity through maintaining programs to maximize our city’s affordability and accessibility;

• Meets short-term goals that maintain and improve our current infrastructure; and

• Continues to invest in the workforce development needs of both the City and the community.

The proposed budget achieves these goals while:

• Balancing revenues and expenditures in accordance with state law;

• Matches spending with established strategic goals; and

• Applies input from diverse community stakeholders, including residents, businesses, nonprofit organizations, boards and commissions, partner agencies, and staff

Thanks to significant one-time funds from the federal government pursuant to the Coronavirus Aid and the American Rescue Plan Act funds and with the help of significant community input on where to best spend these funds, the City has put several innovative programs and services in place. Our allocation from American Rescue Funds is $6.6 ml, one half of which has been received, with the second half to be remitted in the fall. These funds are shown as a separate line item in the long-term financial plan. They will be used to offset revenue losses that have impacted us during the pandemic and to provide new programs that have been requested by our community.

In the following pages, you will see some continuing themes from 2022 and some changes which will allow us to respond to the new challenges we are facing. Continuing themes include management of our established Strategic Goals work plan, organizational retention and development, improving efficiencies, community engagement, and cross-training as part of our succession planning and workforce development process. As a service organization, we are only as strong as our people. A key to our long-term success is our focus on retraining and growing talent from within the City’s staff and attracting new talent from a pool of younger workers less willing to consider public service. The 2023 Budget reflects our mission to achieve the highest level of employee and customer satisfaction by demonstrating effective leadership at all levels, encouraging creative problem-solving, and adapting to changing community needs and environment.

At the forefront of our Strategic Plan is Sustainability, which is also a regional goal. The City has a portfolio of projects that are underway to address rising sea levels, stormwater, and the environmental impact of continuing development. We currently have three engineering companies and the Army Corp of Engineers collaborating with us to develop plans to address these issues. The scope and cost of these plans have not yet been determined, but they are likely to present serious challenges to our taxpayers. While some financial grants are likely, they will not significantly offset the costs to protect our coastline from the impacts of climate change and sea level rise. When these studies are completed, subsequent actions will include determining the optimal phasing, funding, and implementation of the recommended plans of action.

Each year, we must present a balanced budget which represents a plan of service for our community. The bare bones budgets of the pandemic years are not sustainable, and we are facing significant cost increases in fuel, employee benefits, insurance, service contracts, equipment, materials, and supplies. We continue to be impacted by the effects of the current growth in the city and the region. We are also seeing a rebound of the tourist industry and being recently named the “Best Small Town in the South” by Southern Living magazine will create even more interest in visiting Beaufort. We must manage our growth, maintain our preservation standards, and provide a positive lifestyle for all our residents. Unfortunately, not all requests and needs can be met to the degree desired by individual groups and departments. The proposed FY 2023 General Fund Budget can be funded with the revenue available to us, while also supporting new initiatives and positions and providing continuity of services. It is not without challenges, but we have the team in place to accomplish our goals.

The preparation of this budget would not have been possible with the efficient and dedicated services of our entire staff, especially the members of the Finance Department.

Respectfully submitted,

William A. Prokop

City Manager