Following almost no public discussion and few concerns, IOP City Council approved the largest budget in Isle of Palms’ history for the 2025-26 fiscal year with no tax increase.
The new budget will include $32.7 million for projected revenues and $30.1 million for projected expenses. The measure passed on first reading April 22, then on second reading May 22 by a vote of 8-1 after a public hearing and will take effect July 1.
“The city’s finances are in good shape,” said Councilman Jimmy Ward, CPA, licensed by the South Carolina Board of Accountancy. “And I believe we’re on the right track with this budget.”
Expenditures will include financing projects such as:
- Reconstruction of two tennis courts at the IOP Recreation Center
- Essential repairs and maintenance to City Hall
- Beach access paths/walkover improvements
- Beach preservation maintenance and monitoring
- Marina dredging
- Marina parking lot and public green space
- Underground utility lines
- Items identified by the city’s comprehensive drainage plan, including Palm Boulevard drainage between 38th and 41st avenues, and the Waterway Boulevard multi-use path elevation
In the past year, the city continued to grow its cash deposits, which totaled approximately $50.1 million at the end of March and includes $5.3 million in 2025 in property tax revenue from Charleston County. “We are paying off the debt for Fire Station No. 2,” said Mayor Phillip Pounds. “And our cash reserves are increasing.”
Despite the large reserves and expected revenues, there are lingering concerns that they won’t be enough to cover all the city’s projects and its pending debt services in years to come without raising taxes.
City Councilman Scott Pierce raised questions last year about revenues not growing at the same pace as general fund expenses and voiced his uncertainty again in more detail just before the council’s second-reading vote.
“In recent years, the Isle of Palms has benefited from a post-COVID surge in tourism-driven revenues, fueled by the rise in short-term rental units, increasing rental rates, inflation-related interest income and a local building and hospitality boom,” Pierce said. “Like many governments that receive windfalls, the city has been increasing operating expense growth rates at a pace exceeding projected revenue growth.”
The gist of Pierce’s misgivings with the following budget items included: the FY27 Beach Nourishment Project, payroll and benefit-related expenses and structural deficiencies in the budgeting process.
“We’ll get through the upcoming project,” Pierce said about the FY27 Beach Nourishment Project. “But unlike other municipalities, we have not acted upon securing sustainable funding sources for the next more costly eight-year nourishment cycle.”
“In another four years, these costs consume 84% of the general fund revenue,” Pierce continued about payroll and benefit-related expenses. “This trajectory is unsustainable.”
“If we don’t modernize, we are setting up both staff and future councils for failure,” Pierce added about the structural deficiencies in the budgeting process. “Without action, future councils will inherit uncertainty and constrained options to address the long-term financial needs of the community.”
Kerr also pointed out that the city is planning to hire a new full-time beach resiliency officer and has also proposed entering into a joint agreement with Isle of Palms Water and Sewer Commission to secure the services of a federal lobbyist.
“The city may consider incurring debt in 2027 to fund the purchase of a fire engine ladder truck,” Kerr said. “However, since this is a consideration for a future fiscal year, it will depend on the city’s general fund revenues in FY26 — including property taxes, tourism income and any adjustments resulting from property reassessment.”
Two items that Kerr said could help with any new debt concerns are a proposed 15% rate increase to the base fees for business licenses, permits and residential rental licenses and Charleston County’s property tax reassessment, which is scheduled to take effect in 2025. At present, the value of one mill for property is approximately $304,959.
“As a result, the value of a mill could change, although the exact impact is currently unknown,” Kerr said, adding that consistent grant funding is also expected to help avoid any near-future tax increase.
“Over the past five years, the city has secured approximately $13 million in grant funding for various projects,” Kerr added. “We continue to actively collaborate with our grant writer to identify new opportunities aligned with our 10-year capital plan and to maximize available funding sources.”
By L. C. Leach III
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