Occupancy Tax Board Funds Hire, Discusses Investing Savings

They approached the Ocracoke Occupancy Tax Board, an advisory panel which recommends how to disperse over $350,000 each year.  Hyde commissioners have the final authority to spend the money collected from a 3% fee levied on room and cottage rentals.

The commissioners have never before asked the Ocracoke Occupancy Tax Board for money, and have only once changed the amounts recommended to them by the five person board, chaired by Stella O'Neal.

Lost sales tax revenues and enormous expenses after Hurricane Irene dealt a blow to Hyde finances.  The commissioners would have to take money from a departmental budget to cover the $10,000 they've agreed to pay for the services of lobbyist Joe McLees.

Hyde County paid $4.2 million to repair damage done by Irene, reported county finance officer Corinne Gibbs.  $1.2 million came from the general fund; the other $3 million was pulled from Hyde investments in a fund balance.  NC law dictates that counties maintain a fund balance of no less than 8% of their yearly budget.  After withdrawing the $3 million, Hyde's balance is 7.999%, said Gibbs.

The commissioners did not include a contingency fund in the current budget, leaving them no wiggle room.  Occupancy tax board member Wayne Clark said after Irene the county went from being "super healthy" financially "to one in danger."  Gibbs said that was a fair assessment.

FEMA has reimbursed $130,000 to Hyde for expenses incurred after Irene.  While Gibbs said the best case scenario is that FEMA will cover 100% of the remaining $4 million in bills already paid by Hyde, the "very realistic" worst case is the county will receive no additional financial help from the federal agency.  "FEMA is running out of money," said Gibbs, and congress may not allocate more.

Commissioner Darlene Styron spoke to the need for a lobbyist, citing the "fact of how government is running today."

A changing political scene over the past few years in Raleigh means "Eastern North Carolina is in a mess for the foreseeable future," said Rudy Austin, who supports the decision to hire lobbyist Joe McClees.  "We have to look at different ways to help ourselves," he said.

Clark said he does not question the need for a lobbyist, but thinks the money should come from regular county funds.  "Our little $350,000 is real important to us," he said.  "Others in the county benefit from the ferries as well," he said, pointing out that the majority of sales tax, mostly generated on Ocracoke, goes into Hyde's general fund.

The mainland Occupancy Tax Board, which allocates about $6500 each year, elected not to spend $2000 to help pay for McClees' services.  Styron said that decision does not reflect how many mainlanders feel.  "People on the mainland are in support of this lobbyist," she said.

Looking over their balance sheets, the board noted that $67,000 they allocated several years ago to a trolley project, which never got off the ground, had never been returned.  "We got richer tonight," quipped board member Trudy Austin.

Last year, they gave $17,000 to Ocracoke EMS to help purchase a four wheel drive ambulance.  EMS head Brian Carter said his department would hold off on that purchase if the funds were needed for the "greater good" of hiring a lobbyist.

After the public comment part of the meeting, the board voted unanimously to offer the full $10,000.  Martha Garrish told Clark she "100% agree[s] and understand[s]" his concerns, adding "If we want it we're paying for it."

EMS must first send the Occupancy Tax Board a letter stating their willingness to return the money before the process will move forward.

Since occupancy taxes were first collected 20 years ago, the board has saved over $450,000.  They intend to always maintain a savings fund approximately equal to one year of revenues.  Clark said that fund was credit to the careful shepherding of longtime chair O'Neal.  "Everyone on this board spends this money more conservatively than we spend our own money," he said.

The guiding legislation is generous in its breadth:  "Hyde County may use the proceeds of the occupancy tax for any public purpose."  90% of the funds collected on Ocracoke are to be used "only for the direct benefit of the island."   In most counties, the law directs occupancy tax funds to be used for promotion of tourism.

"We spend where it affects tourists and islanders," said O'Neal.  In 2011, the health center, fire department and OCBA received $140,000, $70,000 and $42,600, respectively.  Ocracoke Child Care and the Youth Program both were given funds in the neighborhood of $20,000.  Island emergency medical services, Ocracoke Preservation Society and WOVV all received around $10,000.  The board also supports the library, Ocrafolk Festival and various other island cultural projects.

The current occupancy tax rate is 3%.  Legislation passed in March 2006 allows the county to levy an additional 2% occupancy tax, specifying that 2/3 of the new funds be distributed by an "Ocracoke Township Tourism Development Authority," "to promote travel and tourism in the district and shall use the remainder for tourism-related expenditures in the district."  The commissioners have never voted to enact this additional tax.

In recent years, the board has been thinking about spending part of their reserve on a large project, much like their earlier purchase of the community center.  They have considered both public restrooms and investing in recreational fields.

At the Wednesday meeting, Clark proposed spending the money on shoulder season advertising.  The financial reality of the last twelve months have changed his thinking, he said.  "I ain't into ball fields.  I'm into survival."

With the recent wake up call about "how fragile our transport system is," spring and fall seasons have grown more important, said Clark.  An existing off season advertising plan--scheduled for last fall--was abandoned after Irene.  Clark said off season numbers "are heading south," and would like to "implement the plan within two weeks."

Garrish said listening to a proposal from a marketing company "doesn't obligate us."  Her willingness to support spending occupancy tax money on advertising would "boil to down to price.  $30,000 is different than $100,000," she said.

O'Neal said it would be smart to link advertising dollars to shoulder season events, like the Firemen's Ball, Ocrafolk Festival, Ocrafolk School, and the upcoming Blackbeard Festival, scheduled for late October. 

Austin said the board could support both ball fields and advertising.  "Do we have to rule one out?" she asked.

The board agreed to hear from an advertising firm next week.  At their regular April meeting they will review proposals from Ocracoke organizations and determine how to allocate funds.