Smithfield adopts 14-cent ‘revenue neutral’ real estate tax rate

Published 3:20 pm Wednesday, June 28, 2023

Smithfield’s Town Council voted 4-3 on June 26 to adopt a “revenue neutral” real estate tax rate in light of Isle of Wight County’s recent reassessment of property values.

For the 2023-24 fiscal year, which begins July 1, Smithfield homeowners will pay 14 cents per $100 in assessed value, a roughly 26% decrease from the current 19-cent rate.

“Revenue neutral” means the town will take in roughly the same amount of real estate taxes under the 14-cent rate and 2023 assessed home values as it did during the prior fiscal year year under a 19-cent rate and 2019 valuations. State law requires counties reassess home values every four years.

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Town Manager Michael Stallings had initially proposed a 17-cent rate, which would have brought in roughly $500,000 in additional real estate tax revenue. 

To offset the $500,000, the budget changes adopted by the council include reducing from $125,000 to $50,000 the amount budgeted for consultants and other initiatives tied to implementing a “new vision” for the town, and balancing the budget with $413,344 from the town’s share of American Rescue Plan Act funds.

Smithfield had received roughly $8.8 million in 2021 from the $1.9 trillion federal COVID-19 pandemic relief package, of which roughly $1.8 million remained unspent as of May.

Still included in the town’s $10.2 million 2023-24 budget are 6.2% raises for town staff. Stallings had initially proposed 5% raises, but several council members asked in May that the percentage be increased.

Council members Jeff Brooks, Renee Rountree, Randy Pack and Mayor Steve Bowman voted in favor of the 14-cent rate. Vice Mayor Valerie Butler and council members Mike Smith and Wayne Hall cast dissenting votes.

Butler and Hall supported an idea Stallings proposed at a June 26 meeting that would have entailed reducing the tax rate to 17 cents and using the town’s ARPA funds to pursue some type of tax rebate or credit for homeowners to help offset the extra they’d pay under the new assessments.

“The reassessment is not going to go away,” Butler said.

Stallings said he feared under the 14-cent rate the town would “start next year in a hole.”

Pack acknowledged that the 14-cent rate makes it “likely,” but not guaranteed, that the town would need to raise its tax rate in the future to keep up with the rising costs of government.

Smith said he was “uncomfortable” with trying to stay at a revenue-neutral rate but would have supported going to 15 cents. Smith further asserted he would have preferred the town’s ARPA funds to go toward one-time capital improvement projects rather than balancing the budget.

The budget adoption meeting entailed four separate votes: one to approve the budget, one setting the town’s tax rates, one adopting the town’s capital improvements plan and one setting water and sewer rates. Hall cast the sole dissenting vote on the motion to adopt the budget. The capital improvements plan and water and sewer rates were each approved unanimously.