Hilton Head Island presents FY26 budget draft with lower millage, $650,000 beach-parking target and beach-renourishment plan

Hilton Head Island’s town manager on Thursday presented a draft FY26 budget that proposes a lower property tax millage and leans on tourism-related revenues while preserving services tied to visitor activity.

Town Manager Mark Orlando laid out a consolidated budget he said totals about $74.7 million and covers five funds at the workshop, and described the presentation as “an iteration of what you first saw” at first reading. He said the proposal reduces the operating millage and relies on a mix of property taxes, local accommodations tax, hospitality tax and other fees to support services.

The budget proposal calls for a general fund roughly in the $59.7 million range, a debt-service fund of about $18.8 million, a stormwater utility projection of $11.1 million, a Gullah Geechee Historic Neighborhoods Community Development Corporation fund of $3.2 million and a housing fund of $3.9 million. Orlando told council the town will cover five of six funds at the workshop and will present the capital improvement program at a subsequent meeting.

Why it matters: Council members and staff emphasized that the town uses a variety of dedicated revenue streams tied to tourism to keep property taxes lower. Orlando repeatedly framed the plan as balancing service delivery with fiscal restraint while positioning the town to pay for large capital work such as beach renourishment.

Orlando described the revenue mix and notable items in the draft: the town is projecting $650,000 from a new beach-parking program, about $6.8 million from local accommodations tax and about $6.5 million in hospitality tax. He said short-term rental permit fees and business licensing were also important revenue lines and that officials will monitor collections monthly and adjust assumptions as needed. “We monitor it monthly,” Orlando said of short-term-rental and related revenues.

Council members sought clarifications throughout the workshop. Several asked staff to show the sources and timing of transfers between special funds and the general fund; staff explained that fund-based accounting requires some revenue to be collected in dedicated accounts then transferred for eligible spending. Adriana, a finance staffer who provided detail on fund transfers, explained the accounting: dedicated funds come in and then move into the appropriate expenditure area when the town spends them.

Debt, reserves and beach renourishment: Orlando said the town is developing a funding strategy for an estimated beach-renourishment contract and is looking at a cash/debt split between scenarios such as 70% cash/30% debt and 60%/40%. He told council the debt-service fund currently holds roughly $14.8 million in surplus balance that could be used for renourishment or land acquisition, but moving those dollars into projects would likely involve a short-term bond issuance to draw cash when needed. Orlando said the administration expects to present an ordinance with a funding plan after negotiated contract terms are known and that the capital improvement program workshop will follow.

Stormwater and capital transfers: The draft includes a stormwater utility program budget with $11.1 million in revenue projections and roughly $6.3 million planned as transfers to CIP this year. Staff said the stormwater rate would remain at $150 (no rate increase) and that a higher share of stormwater funds is now being budgeted for corrective maintenance and partner-reimbursable projects; the draft allocates about $2 million for reimbursements to POA or private partners doing stormwater work. Council directed staff to present a stormwater-utility workshop in the summer that will show maps of ownership (town, county, state, private) and identify where responsibility and planned work lie.

Gullah Geechee CDC and housing: The budget houses a separate fund for the Gullah Geechee Historic Neighborhoods Community Development Corporation, with revenues largely driven by prior-state and county grants and a residual state grant balance remaining from earlier appropriations. Thomas Boxley, identified at the table as the CDC’s executive director, described programs for small-business development, financial-education workshops and cultural-tourism wayfinding to support neighborhood businesses. On housing, the town’s housing fund includes $3.9 million in proposed revenues and sets aside ARPA funds and other prior-year dollars to support projects including the Northpointe partnership, which Orlando described as a planned 60-unit project aimed at households at a range of income levels. Councilmembers asked staff to develop a housing workshop to consider recurring revenue options and a possible minimum housing fund balance.

Other budget highlights: the draft would continue certain public-safety investments including a public-safety assessment and continued stipend support for Beaufort County sheriff’s deputies who live on the island; place $50,000 in operating for removal of abandoned vessels after due process; and propose a revised fund-balance policy that raises beach-preservation minimums and formalizes reserve targets for several funds.

Next steps: Orlando and staff outlined a series of workshops this summer for council: a strategic-plan validation workshop, a stormwater-utility workshop, a capital improvements workshop and a housing workshop. The beach-renourishment funding ordinance is expected to move through the finance-administrative committee and then to council first reading in August and second reading in September, after negotiated contract terms are confirmed and staff refines the funding mix.

Attendance and public comment: Several councilmembers and staff asked for a clearer public schedule for the workshops. Three residents spoke in public comment about parking times and meeting hours, the Gullah Geechee CDC’s funding needs and concerns about workforce housing and service access for residents who do not live on the island.

The budget as presented at workshop does not represent a final council decision. Council asked staff to return with additional analysis on revenue trends, fund transfers, stormwater maps and a proposed funding approach for the beach-renourishment contract before any final funding or borrowing decisions are adopted.