Town finds way to avoid tax hike

Published 12:05 pm Wednesday, May 31, 2017

By Ryan Kushner

Staff writer

The Smithfield Town Council may have found a way around any tax increases this year.

For a few weeks, debt service payments for town projects undertaken last year loomed, and the town needed to find additional revenue to pay off a roughly $300,000 deficit. The town advertised its worst-case scenario for the fiscal 2018 budget, a tax increase for vehicle licenses, from $20 to $27, and adding a $10 trash collection fee.

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However, Town Treasurer Ellen Minga informed the Council on the afternoon of May 23 that factoring in previously unaccounted for reimbursements for several town projects, the deficit shrunk to roughly $83,000. {mprestriction ids=”1,2,3,4,5,6″}

The town had not reimbursed itself for money spent toward the Joseph Luter Jr. sports complex and Windsor Castle restoration last year, according to Minga. Both projects received sizeable contributions and the disbursements of those donations were reevaluated and factored in to the upcoming budget for the town to cover much of the deficit, Minga said.

“That’s much better shape than we were in when we initially started talking about this,” said Council member and chair of the finance committee Randy Pack.

“It’s looking strongly like we’re not going to go with the budget that we advertised.”

Following a discussion by Council members, the trash pickup fee was taken off the table and — for most members — so was a raise in the vehicle license tax.

The Council came to the consensus that no tax increase would be imposed in the upcoming budget. Instead, the town would potentially dip into its reserves to cover the difference.

Council member Milton Cook said that historically, the town’s budgets have been conservative, and the town has ended most years with more funds than predicted.

“Why add to the tax if you’re going to have a surplus at the end of the year?” said Cook.

Minga said that the general fund reserves currently hold $7.6 million, with $3 million restricted for special projects. The $83,000 would be “relatively small,” according to Minga.

The consensus to use the town’s reserves came not without a few concerns expressed as well.

Council member Connie Chapman said that with the Joseph Luter sports complex and Windsor Castle restorations marching toward completion, the town would have to add more employees to the parks and recreation department in the future.

The budget contains a 2 percent cost of living increase for town employees, and one new position for the parks and recreation department. Parks and Recreation Director Amy Musick requested two new employees.

“I’m trying to think about not just today,” said Chapman.

Chapman asked that Minga consider what a 1 or 1.5 percent pay increase for employees would look like for the budget.

Council member Mike Smith said he would prefer to see the deficit balanced at least half way with a vehicle license tax increase and split the difference. It would ease up the take from reserves, he said.

“I could deal with a slight increase in the car tax — not the full thing,” said Smith.

Vice Mayor Andrew Gregory said he saw where Smith was coming from, but “is it worth the $50,000 that the only thing people will hear, know and read is that the town raised taxes?”

Council member Denise Tynes also expressed some reservations, noting that the reserves are for emergencies.

“I hate to go and go into the reserves and then next year be in the same position,” said Tynes. “Eventually we’re going to have to raise our taxes to weigh it out.”

Pack said that looking forward, the town doesn’t have any major projects coming up.

Town Manager Peter Stephenson interjected, and noted that the town still needed to resurface Main Street, extend the water line on the street’s 300 block as well as fund a new emergency radio system.

Gregory noted that the town does not have guidelines about using money from its reserves, and asked that an economic policy statement be put on the agenda for next month’s committee meetings.

“So we have some guidance going forward,” Gregory said.

The Council will hold a public hearing for the fiscal 2018 budget at its Town Council meeting June 6 at 7:30 p.m. at The Smithfield Center. The budget does not have to be formally adopted until the end of June.

Smithfield Foods donated $1 million to the restoration at Windsor Castle and the town put up $2 million. Foods also donated $1 million to the sports complex, following a donation by its former CEO, Joseph Luter III, in the amount of $2 million. Farmers Bank is also contributing $175,000, and Isle of Wight County agreed to put up $250,000 over a five-year period.  {/mprestriction}