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Fitch expects revenue growth to continue to track ahead of inflation and nearer U.S. GDP growth based on tourism driven economic activity. Tourism related tax revenues increased rapidly over the prior decade and are a growing source of general fund spending. The tax base is revalued every four years and expected to remain relatively neutral in the fiscal 2018 revaluation, though building permit revenues are coming in ahead of schedule and demonstrate the growth of private investment in the town’s tourism industry. The town’s ad valorem revenue raising ability is broadly capped by the provisions of South Carolina’s Act 388, which limits property tax rate increases to population growth plus inflation. The law provides for the carry-forward of unused millage increases for up to three years and exceptions in limited circumstances for emergencies, the loss of significant tax payers, and prior year deficiencies. Despite these limitations on the property tax, other taxes and fees provide solid flexibility. Fitch finds the flexibility to increase fees for business licenses, utility franchise, storm water, and vehicle registration would adequately cover potential revenue loss in a moderate economic downturn. Expenditure Framework The town operates with a general fund budget of roughly $35 million of which roughly half is consumed by public safety expenses.
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