Hilton Head Island adopts $174.7 million FY 2026 budget, lowers property millage

The Hilton Head Island Town Council on May 6 adopted a consolidated fiscal year 2026 budget of $174,700,000 and approved lowering the town property millage from 21.4 to 19.4 mills, Town Manager Mark Orlando told the council during a public hearing and presentation earlier in the meeting.

The budget, Orlando said, is "structurally balanced," meaning recurring revenues are intended to cover recurring expenditures without drawing on prior-year fund balance. The plan allocates funds across six major town funds and highlights a major capital program this year: beach renourishment with an opinion of probable cost of $47,500,000. Orlando also told council the capital program includes $77.7 million in CIP projects overall.

Why it matters: The budget both reduces property tax rates and sets aside money for a high-cost beach renourishment project that the town expects to fund from a mix of cash and possible debt. It also increases several reserve minimums and preserves operating funding for public safety, stormwater, and housing initiatives.

Major figures and changes - Consolidated budget total: $174,700,000 (all six funds). - General fund proposed: $59,754,000 (a 4.46% decrease year over year). - Debt service fund: $18,864,000. - Stormwater utility revenue: $11,100,000. - Housing fund: $3,900,000. - Anticipated transfer-in total across funds: $90,560,000. - Millage reduced from 21.4 to 19.4 mills; town manager highlighted that property values and alternate revenues helped enable the reduction. - Beach renourishment: $47,500,000 (opinion of probable cost; lower bids have been received but a contract was not concluded at the time of the presentation).

Staffing and operating highlights - Orlando proposed two new full-time positions: an integrated pest management specialist and a parking program manager (described as a community code enforcement officer focused on parking). He also proposed converting a 30-hour part-time position to full time. - Salaries and benefits are up (a proposed up-to-4% performance-based pay increase and employer pension/insurance cost increases); operating budgets were trimmed roughly 6.8% after line-item scrubs. - Contracted public safety costs were shown as decreasing overall in the plan.

Reserves, debt and capital - Council packet shows a proposed adjustment to the beach preservation fund minimum balance from 12 to 20 (the presentation used those numbers to describe the recommended minimum); Orlando said the change was intended to strengthen preparedness for the renourishment project. - Debt service fund balance carried a significant surplus (Orlando said about $14.8 million) and staff noted the possibility of using short-term debt or callable bonds to help fund beach work after further council discussion. - The town manager said town debt has been reduced substantially in recent years and the proposed budget plans $7.3 million of scheduled principal payments in FY26 and contemplates $7.4 million of callable beach-preservation special obligation bonds when council decides the funding strategy.

Public process and next steps - Orlando presented the plan as part of a public hearing at the May 6 meeting; he told council and the public the presentation would be followed by two workshops (scheduled May 12 and May 13 in the packet) and a second-and-final reading June 3. - Several councilmembers thanked staff for early release of materials and requested an additional evening budget hearing so residents who work during the day can attend. Resident Richard Beasy spoke at the May 6 public hearing asking the council to schedule at least one budget meeting in the evening to hear working residents.

Council action - Councilmember Bryson moved to adopt the consolidated FY26 budget ordinance; Councilmember Alfred seconded. The council voted 7-0 in favor.

What the council emphasized in debate - Multiple councilmembers praised the town manager and staff for balancing the budget while preserving services. - Council discussion touched on reserves policy, the use of ATAX (accommodations tax) transfers to support infrastructure projects, stormwater projects, Gullah Geechee CDC funding and the housing fund, and the sequencing and realistic timing of capital projects (for example, some projects remain in design and permitting and will not be constructed in FY26).

Speakers quoted or referenced in this report are drawn from the meeting record: Town Manager Mark Orlando; Mayor Alan R. Perry; Councilmembers Becker, Bryson, Brown, Alfred, Tunner and Desimone; and a public commenter, Richard Beasy.

The council adopted the budget on a unanimous 7-0 vote and scheduled the second reading and related workshops described by Orlando. The town manager and staff said they will return with proposed language for debt or financing of the beach project after the budget is adopted and following the finance and administrative committee discussions.