Smithfield adopts budget with 13-cent car tax reduction

Published 3:50 pm Wednesday, June 8, 2022

Smithfield’s Town Council voted June 7 to adopt Town Manager Michael Stallings’ proposed 2022-23 budget without changes.

The budget includes what Stallings has termed a “temporary” 13-cent reduction in the car tax rate in light of a sharp rise in the value of used vehicles.

Isle of Wight County supervisors similarly voted in March to lower the county’s personal property tax rate 60 cents to $3.90 per $100 of a vehicle’s value. Had the county tax remained at last year’s rate of $.50 per $100, half of all county residents with 2013-17 model cars would have seen increases of 42% or more on their April tax bills, according to Gerald Gwaltney, the county’s commissioner of the revenue.

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Gwaltney attributes the sharp rise in valuations to a nationwide drop in new and used vehicle inventories spurred by the economic impacts of the COVID-19 pandemic and a shortage of the computer chips needed to run newer cars. The issue isn’t limited to any particular year, make or model vehicle. Drivers of pickup trucks, he said, will see the biggest impacts.

Smithfield drivers currently pay an extra $1 per $100 on top of the county’s rate to the town. According to Stallings, the now-lowered rate of 87 cents per $100 is intended to mirror the county’s action, both of which amount to a roughly 13% reduction.

Gwaltney, speaking to Smithfield’s Town Council in March, had estimated half of all Smithfield drivers with 2018-20 vehicles would have found themselves paying an extra $73 or more in taxes just to the town had Smithfield’s tax rate stayed at $1.

Even with the rate reduction, the town still anticipates collecting an extra $240,000, or 30%, in personal property taxes in the coming fiscal year. In March, Gwaltney had estimated leaving Smithfield’s tax rate as-is would have brought in an extra $335,000.

The now-adopted budget lists the town’s total revenues and expenditures for the coming fiscal year at just over $11 million, an 18.5% increase over the current year’s $9.4 million budget. While there are no tax increases, it includes an extra 20 cents, or a 3% increase, to the water usage rate for in-town customers.

Currently, Smithfield residents pay $6.55 per 1,000 gallons, according to the town’s website. The $6.75 rate, according to Stallings, is intended to keep the town ahead of inflation.

The budget includes a minimum 4% raise for all town employees, with those on lower pay grades capped at 15% and those on higher pay grades capped at 10%. According to Stallings, the raises would bring the town’s average pay to just below the market median based on the results of a compensation study Evergreen Solutions presented to the town in April. The intent is to give additional raises next year to anyone still below market, Stallings said.

There’s also a 105% increase in the town’s parks and recreation spending, and a 140% increase to its funding for public buildings, both of which, according to town officials, are driven by unspent federal pandemic relief funds the town received via the American Rescue Plan Act. In April, the council voted to put $3.4 million in unspent ARPA funds toward adding football field lights and other amenities at the Joseph W. Luter Jr. Sport Complex, funding the town’s portion of Isle of Wight County’s park-to-park bicycle and pedestrian trail, sidewalk improvements, tourism projects and renovations to the Smithfield Center.