City Hall | Photo by Rūta Smith

An $18 million shortfall loomed over the Nov. 12 Charleston Ad Hoc Budget Advisory Committee meeting as participants weighed options to balance next year’s budget. This deficit comes on the heels of a $42 million shortfall the city managed in 2020.

The city is currently exploring a plan that would balance the 2021 budget with $9 million in cuts and $9 million in new revenues, which would be used to avoid reductions for critical services like police, fire and sanitation. 

To balance the budget without new taxes, the city would have to lay off 40 police officers, 31 firefighters, 23 recreation department employees and 13 sanitation and street workers, according to a press release sent by city officials Thursday.

Deep cuts would also be required across city government personnel on top of 200 positions that have already been cut over the last 10 years, reducing the workforce to roughly 1,700 employees as the city’s population continues to increase.

“Our needs and population are continuing to grow … and if you compare it to 10 years ago, over time, our employees and staff have reduced considerably, at the same time our population has increased considerably,” Mayor John Tecklenburg said during the meeting. “I point that out to share with you the challenges we have are … primarily on the revenue side, not on the expense side.

“We’ve got a pretty lean-running organization right now, but where our real challenge is, is the fact that our projection for licensed businesses and license revenue for next year is down something like $9 or $10 million, and our projection for parking revenue is down by similar amounts,” Tecklenburg said.

The $9 million in new revenues would come from a combination of increasing property taxes by three mills and a 50% reduction in the Local Option Sales Tax (LOST) credit, amounting to an additional $1.50 per week on an average $300,000 home.

The city has looked at similar options to balance past budget shortfalls, according to chief financial officer Amy Wharton, but the city is looking at a larger shortfall now than previous years largely due to the coronavirus pandemic.

A big part of the budget shortfall stems from the United States Congress’ inaction on emergency COVID-19 relief funds for smaller cities and counties. Greenville County, with a population of just over 500,000 is the only S.C. county with enough residents to qualify for federal assistance. 

“Even blowing off money for 2020, if we even got half of what the house passed for 2021, we would not be having this discussion here today about millage and the Local Option Sales Tax Credit,” Tecklenburg said. “We would have a balanced budget.”

There may be a way out without the city having to make significant cuts in their budget at all, though it may be a long shot in today’s political climate.

“If there is some sort of compromise that comes out of the [U.S.] Senate and the House next year in 2021, we have the opportunity then to not have to worry about this millage increase or LOST revenue,” said Councilman Peter Shahid. “That’s something the general public needs to be aware of.”

The final balanced budget will be presented to the full City Council at a budget workshop on Nov. 18 before going to the Ways and Means Committee and the City Council again for consideration and first reading on Dec. 1. There will be opportunities for public comment at the upcoming public meetings.