Council must find revenue to cover debt payments

By Ryan Kushner

Staff writer

The Smithfield Town Council is examining several possible tax increases or fees for real estate, business licenses, motor vehicles and trash pickup in order to pay off the looming debt service for major town projects.

While numerous options are on the table, the town is expected to narrow down what it may select as revenue generators.

At a Town Council Finance Committee meeting Monday, Town Treasurer Ellen Minga presented the Council with options for additional revenue sources as the town seeks to find nearly $300,000 for debt service on a $5 million loan taken out last year to pay for the restoration of Windsor Castle and the new Joseph Luter Jr. sports complex. {mprestriction ids=”1,2,3,4,5,6″}

The town last changed its real estate tax in 2007, readjusting the rate from 21 cents to 16 cents per $100 assessed value. The adjustment followed a reassessment that recorded higher property values. While the rate was lowered, it generated additional money to help fund the Pinewood Heights resettlement project.

A one cent increase to the real estate tax would amount to just over $108,000 revenue, according to Minga, based on an assessment from 2015.

The Town Council also discussed raising business license rates to match with Isle of Wight County’s current rates, an increase that would only be attributable to seven larger businesses within the town, according to Minga.

Another option floated was an added fee on trash pickup for town residents. A fee of $5 monthly would bring in over $179,000 for the town in revenue, and a monthly fee of $10 would bring in $359,400.

An option put forth to adjust the town’s motor vehicle license tax to match the county’s rates would bring in a difference of $95,700.

“There just aren’t that many avenues to go down,” Minga said to the Council of locating additional revenue for the impending debt service.

Minga presented three budgetary options for the Town Council during a budget work session last week, which included one option of raises and new positions for town employees, an option of no raises but with new positions, and, finally, an option for no raises and no new positions.

Even with the final option of no pay raises or new positions, the town would still need to find roughly $230,000 for the debt service.

The town took out a $5 million loan late last year in part to pay for Windsor Castle restorations and the sports complex, projects which both received sizeable donations from Smithfield Foods and its former President and CEO, Joseph Luter III.

 Luter donated $2 million to the sports complex in 2015, on the condition that the county contribute $250,000 as well, and that the venue bear the name of his father, Joseph Luter Jr.

Foods also donated an additional $1 million for the major ballpark project.

The town bought the land the ball fields will be located on at $775,000.

Farmers Bank is contributing $175,000 as well.

As for Windsor Castle, Smithfield Foods put in $1 million in 2015 to restore the historic buildings and the 1750s manor house, once owned by Smithfield founder Arthur Smith.

The town responded with $2 million of its own for the restoration project.

The donations from Foods, along with contributions by the town, do not end there. Indeed, philanthropic contributions from the pork processing company to the town date back to the early 1990s, with about $500,000 contributed for restorations to Main Street.

In 2000, Smithfield Foods also donated about $650,000 to construct The Smithfield Center, to which the town put up $1 million and the county gave $510,000. The town’s meals tax went up from 2 to 4 percent with the building of the Center.

In 2003, Foods gave $1 million toward the Luter Family YMCA, which the town continues to contribute to annually as well.

From 2003 to 2010, Luter gave $1.5 million for the South Church Street beautification project, with another $1 million coming in from Foods. Other funds for the project came from private donations and federal transportation funds.

In 2009-10, Luter gave his largest single donation to the town to date with $7 million for Windsor Castle Park, to which the town continues to provide maintenance and upkeep.

Managing Editor Diana McFarland contributed to this report.

 

Tax increases being considered by the Smithfield Town Council include:

Real Estate Tax

Smithfield: $.16 per $100 (adopted in 2007).

A one-penny increase would amount to $108,355 in additional town revenue.

Motor Vehicle License Tax

Smithfield: $20 for cars and trucks.

Isle of Wight: $33 for cars and trucks

Proposing to make it the same as Isle of Wight

A difference of $96,330 annually.

Trash Pickup Fee

No current fee for trash pickup in Smithfield.

Current number of stops: 2,995

Fee of $5 per month: $179,700 in annual revenue.

Fee of $10 per month: $359,400 in annual revenue.

Business License Tax

Smithfield: $30 minimum

Isle of Wight: $50 on gross receipts less than $50,000

Considering to make it the same as Isle of Wight

Potentially up to $275,000 additional revenue   {/mprestriction}