Stone Harbor Considers Tax-Rate Decrease

STONE HARBOR – Stone Harbor introduced its 2018, $16.4-million budget Feb. 6, maintaining its local purpose tax levy of $0.245 per $100 of assessed value. The budget also showed an increase in the revenue anticipated from local taxes which rose by just under $1 million.
The increase in tax revenue without a change in the tax rate was possible due to the results of the borough’s revaluation of property assessments. The revaluation process, which took much of 2017 to accomplish, resulted in an increase in assessed valuation of just over $400 million. In the view of at least two property owners who brought their issue to the borough, the increase in valuation should have resulted in a tax decrease. 
Stone Harbor Borough Council openly discussed the possibilities for a lowering of the local tax rate at its work session March 6. Under consideration was a potential decrease in the rate by $.005. That measure did not pass.
The borough has recently invested heavily in projects to dredge its back bay and replenish its ocean beaches. The beach replenishment was made more expensive by a refusal of the Fish and Wildlife Service to allow a sand borrow area in Hereford Inlet, citing an obscure regulation that would prevent the Army Corps of Engineers from using federal funds to pull sand from the inlet.
Proactively, the borough has established a set-aside for future dredging and replenishment efforts, beginning with $50,000 for each in this year’s budget.
Council President Karen Lane reminded council members that a goal of the budget process was to reduce overall debt and the impact of debt servicing. Part of the budget, she pointed out, includes paying for smaller capital improvements rather than allowing them to increase the levels of bond indebtedness. That effort would be impossible if the tax rate were lowered, she said.
Business Administrator Jill Gougher recommended against any change to the tax rate, citing the need for the improvements and the probability that the borough would only end up paying for them through a bond issue.
For Mayor Judith Davies-Dunhour, it did not make sense to cut things out of the budget if “we are just going to finance them and pay more.”
Gougher estimated that a reduction of a half-cent in the tax rate would mean that the borough would add $146,000 to its capital financing.
Gougher’s analysis of the impact of a small decrease in the tax rate also showed that the borough would have to decrease the set-aside for future dredging and replenishment efforts.
Gougher’s presentation suggested that the increase in the assessment valuation allowed the borough to maintain the tax rate under a circumstance that might otherwise have dictated an increase given the back bay and beach issues.
Property owners in the borough are already facing increases in water/sewer rates due to a need to deal with aging infrastructure across much of the borough.
In the end, the council did not support a tax decrease at this time.
The overall budget was scheduled for adoption at the regular meeting March 6 but was postponed to March 20, because the borough wanted to wait for more clarity on the state budget and state support numbers.
To contact Vince Conti, email vconti@cmcherald.com.