Smithfield votes in 19 percent tax hike

Published 5:53 pm Tuesday, September 10, 2019

By Frederic Lee

Staff writer 

The Smithfield Town Council voted to raise the real estate tax by nearly 19 percent following a public hearing at its Sept. 3 meeting. 

The action raises the town rate from 16 to 19 cents per $100 of assessed value. For a home valued at $250,000, the tax bill would increase by about $75 a year, from $400 to $475. 

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Town residents also pay Isle of Wight County real estate tax on their homes. The county tax rate is 85 cents per $100 assessed value, and totals $2,125 on that $250,000 home. Combined, the town and county tax on that house will be $2,600.

No one spoke for or against the town tax increase during the public hearing. 

During the fiscal 2020 budget public hearing in June, however, several town residents spoke against tax increases in general. {mprestriction ids=”1,2,3,4,5,6″}

The town announced the Sept. 3 public hearing for the tax increase in the July 31 edition of The Smithfield Times. 

The Town Council held a public hearing in June for the fiscal 2020 budget, which is separate from the tax rate increase public hearing. The budget was adopted by the Town Council later that month, and was based on revenue that would result from the increase. 

Town Council was originally scheduled to vote on the 3-cent real estate tax increase at its July 2 meeting, but stopped short when it realized it failed to set a public hearing first that specifically addressed the tax increase.  

One complication to this year’s budget process was the real estate property reassessment conducted by Isle of Wight County.  The reassessment found that the value of single-family homes within Smithfield town limits went up by 2 percent. That means that if the tax rate had been maintained at 16-cents per $100 in assessed value, the town’s actual tax revenue would increase. 

By law, a locality gets to keep the taxes generated by 101 percent of the current assessment. If a reassessment increases a property’s value by more than 1 percent, the additional tax has to be rolled back — called revenue neutral.

The revenue neutral rate for the town would be 15.66 cents, according to the town’s public notice on July 31.

Town Attorney Bill Riddick said that maintaining the real estate tax rate at 16 cents and raising real estate taxes by three cents would have both required public hearings if they had occurred in separate years, but that officials are allowed to hold one public hearing that addresses both, which is what happened. 

The Isle of Wight County Board of Supervisors decided to keep the additional revenue from the recent increased property reassessment. While the actual rate did not go up, the higher property values result in the equivalent of a 2.7-cent real estate tax increase.  {/mprestriction}