Budget Blues
Editor's note: I am working on an update to this story, which will include information from the May 9th meeting.
Ocracoke Civic and Business Association (OCBA) will hold a Civic Affairs meeting Wednesday, May 9, at the Berkely Manor at 6:30pm. Agenda items include: Hyde County Tram Update by Bill Rich; Passenger Ferry Update by Jed Dixon; Community Square Parking Lot Update by Scott Bradley; Park Service Update by Ed Fuller; and Ocracoke Civic and Business Association Budget.
Let's take a look at the last item on the list. But first, some background:
OCBA is a contributor (member) organization of mostly businesses; their annual dues pay for advertising in the Walking Map and on the visitocracokenc website. It's also possible to join OCBA as a civic member. Both types of contributors can vote for board members; the board chooses officers from among themselves. Neither civic nor business contributors are invited to OCBA board meetings; they can request the minutes of said meetings and attend "contributor input" sessions after the board meeting is over, but they can't make motions or vote on agenda items. OCBA also holds Civic Affairs meetings every other month, but these are informational meetings only and there are no motions or votes.
These are recent changes. Until last year when OCBA overhauled their bylaws and changed their procedures, the board met monthly in public meetings with contributor input, motions, and voting.
The current OCBA board members are: Rudy Austin, president; Justin LeBlanc, vice-president; Wayne Clark, treasurer; Pheobe Kot, secretary; and Ashley Harrell, John Giagu, Martha Garrish, Chip Stevens, and Sharon Brodisch. OCBA employs an administrative assistant, Kathryn Waldrop, and a Travel & Tourism director, Helena Stevens. The board recently accepted applications for both these positions, but hasn't yet announced the new hires.
OCBA publishes the Ocracoke Walking Map each year, maintains a website and social media accounts, sponsors and coordinates events for 4th of July, British Cemetery, Blackbeard's Pirate Jamboree, and Holiday Boat Parade, hosts travel writers, and oversees the overall marketing of the island. Through a partnership with Magellen Strategy, OCBA developed a logo and brand for Ocracoke, and with the help of Element Advertising, they turn the brand into memes and ads.
In January of this year, Ocracoke lodging businesses began collecting the new 2% occupancy tax increase. (Ocracoke already charged 3%, now it's 5% total.) The original 3% occupancy tax is for "any public purpose" and a five-member board appointed by the Hyde County Board of Commissioners (BOC) makes recommendations for the way its spent. On Monday, the BOC approved the spending as recommended (read about it here) for 2018-19. The occupancy tax board (OTB) members are Bob Chestnut (chair) Trudy Austin, Stephanie O'Neal, Byron Miller, and Nancy Leach.
The 2% is a bit different. The state statute that allows Ocracoke to charge the 2% requires that it be adminitered by a five-member Tourism Development Authority (TDA), who have the ultimate decision-making power on how to spend it. The BOC appoints the TDA members, but has no say in where the money goes. The TDA is comprised of Amy Howard (chair), Wayne Clark, Martha Garrish, Daphne Bennink, and Greg Honeycutt. You may notice that two TDA members are also OCBA board members – that was by design of Ocracoke's commissioner, Tom Pahl, who wanted to have OCBA closely involved in the decision-making process because they have been doing Ocracoke's advertising.
The 2% fund is more constrained – all the spending has to benefit tourism and 2/3 of the money has to be spent on marketing. The other 1/3 can pay for tourism-related expenses, including the planning of events, but (for some strange reason), not the implementing of them.
In an average Ocracoke year, the TDA will collect $300,000 and spend $200,000 on promoting the island. Of that estimated $300,000, the TDA has committed on granting $251,000 of it to OCBA for 2018-19, $20,000 of it to OPS for the Island Inn project, and $15,000 on their own administrative costs. That leaves a surplus of ~$14,000.
The $251,000 that OCBA will get from the TDA breaks down like this: $130,000 for paying a marketing firm (Element, based in Asheville), $100,000 for salaries for 1.5 positions, and $27,600 for administrative expenses. (Yes, that adds up to more than $251,000, but that's the budget they submitted. They want to use $6500 of OTB funds to add to this request.) The TDA and OCBA are negotiating a contract that will make OCBA the official agent of the TDA's marketing expenditures.
(The TDA also approved giving OCBA $45,000 between now and the end of the fiscal year in June. $30,00 will go toward marketing and $15,000 will pay the OCBA Travel & Tourism director's salary.)
The minutes from the March 12th TDA meeting state: "There is a concern amongst [TDA] board members paying for 100% of the personnel. The concern is with the total number and the director’s salary. Daphne would like the OCBA to reorganize the request so the [TDA] is not paying 100% of the request. Justin to “repackage” personnel request."
However, at the April 9th meeting of the TDA, there was no mention of the "repackaged" personnel request. The OCBA/TDA draft contract that was presented at that meeting does not have a monetary amount attached, but the TDA has already voted to commit $251,000. The new OCBA Executive Director will take over the duties of the Travel & Tourism director: working with Element Advertising,managing the day to day marketing, and working with OCBA contributors. Daphne Bennink from the TDA and Bob Chestnut from the OTB, along with Justin LeBlanc of OCBA make up the personnel committee that will hire the OCBA Executive Director.
All this leads to asking and answering why OCBA didn't get their full request from the OTB. They asked for $112,117 and were awarded $82,833.
As I mentioned before, Tom Pahl expressed his concern with the OCBA request. He had counted on them asking the OTB for less money this year because they are getting the lion's share of the TDA's money. Last year, the OTB gave them $50,000 for marketing and $70,000 for events, and this year's request (combining the two funding sources) is triple that (from $120,000 to $363,000).
They asked for more. Way more. With $251,000 from the TDA going toward marketing, salaries, and administrative costs, OCBA still needs cash to support their events and other expenses. Ocracoke loves events and they are generally viewed as a Good Thing for the island economy. OCBA plans to augment this year's Pirate Jamboree with more better pirates for the 300th anniversary of the Royal Navy's victory. It takes $38,000 to party like a pirate; and another $60,000 to sponsor 4th of July and other smaller events.
Tom Pahl wanted the OTB to Just Say No to OCBA and force them to rethink their strategy. Lower the salaries? (The Executive Director will earn around $60,000 a year plus benefits). Make do with the same amount of pirates as last year? Buy a little less advertising? A lot less? Tom asked the OTB to reduce the grant to OCBA by at least $50,000.
At the April 23rd OTB meeting, there was a lot of discussion about how much OCBA should get.
Tom reiterated his position (Don't do it!) and Justin reiterated his (Ocracoke needs us to spend this money).
Bob began the OTB discussion with two comments: "I strongly encourage the budget for the executive director's salary. It's more valuable than advertising. The executive director benefits Ocracoke immediately." and "We should structure what we do to protect essential events."
Fireworks cost $26,340 and there's no debate on that. Burn that money! OTB set that line item aside and looked at the rest.
They saw little value (or at least not $10,000 worth) in the to-be-determined mystery fall event. They wondered if the Pirate Jamboree and 4th of July events really need to expand as much as OCBA planned (it came to an increase of $18,000 for the BPJ and $8500 for 4th of July on top of what is usually spent.) Do they actually need $5000 in new office equipment? Can the TDA pay for office needs and the lease on the little visitor center (in the Community Square)? Can't they axe the yard sale? Maybe put off re-designing the Walking Map for another year?
Many numbers were spitballed.
"I don't want them to take money from events and spend it on other stuff," Byron said.
Stephanie agreed. "We need to earmark the money for events and not office supplies," she said.
Their suggestions did not win support from the chair. "Do we want to tell them how to spend their money?" Bob asked. "Give them the freedom to do what they want with their budget or go to the TDA and re-negotiate." He added that he "wouldn't want to shortchange what we've been doing with events" but they can "go back and tweak their budget on the increases."
Note: Bob did not suggest giving any other organizations that benefit of the doubt. The OTB can (and mostly does) dictate exactly which projects it support, and which it wants to skip. For example, OPS can't decide they'd rather pay an archivist than host a Fig Festival. WOVV can't spend their occupancy tax grant to pay their construction overages. Their allowed expenditures are earmarked.
Finally, the OTB voted 4-1 to give OCBA an unfettered $82,833.
(The fun never ends.... the OTB has an excess reserve fund that they need to spend. Oh, goody! more meetings! Funding requests from Ocracoke Foundation, Ocracoke Youth Center, and more were moved to the reserve discussion. Bob said that before the end of May there'll be a meeting and information about whether and how they will take community requests for this fund.)
Tonight's OCBA meeting will include presentation of the new budget that takes into account the ~$30,000 they wanted but didn't get.
Maybe they won't need to cut the budget at all. OCBA has $34,000 in a CD that's reserved for public restrooms. Rumor has it, they are talking about dropping that project and using the money to shore up their expendable cash.
Stay tuned!
