By Matt Leonard

Staff Writer

Smithfield’s meals and occupancy taxes will increase after a failed attempt and then a last minute change to the town’s fiscal 2017 budget at a continued Town Council meeting Monday.

The $100,000 in additional revenue generated by the tax increases will be used to finance a 5 percent across-the-board pay increase for town employees.

The budget proposed by the Council’s Finance Committee proposed an increase to vehicle license fees but flat taxes. It failed to pass with a two to five vote. Council members Randy Pack and Vice Mayor Andrew Gregory were the only ones to vote in favor of that plan. {mprestriction ids=”1,2,3,4,5,6″}

“We’re in uncharted territory here,” Town Attorney Bill Riddick said after the budget failed to pass. “We need to talk about real numbers. We’re not voting on concepts; we’re voting on numbers.”

After the original budget failed, Council member Michael Smith made a motion to amend the Finance Committee’s budget to eliminate the vehicle license tax increase and instead raise the meals and occupancy taxes. Before the amendment was voted on, the Town Council took a short recess to figure out the numbers it would be voting on.

Smith said the vehicle license fee only affects Smithfield residents. He argued that the meals tax and occupancy tax will place more of the cost on visitors as Smithfield’s tourist economy grows.

This has been a stance repeated by multiple council members since the budget process began. Mayor Carter Williams was the first one to suggest a tax increase at a work session last month. The town needs new sources of revenue, Williams said.

Council members agreed to increase the town’s occupancy tax — paid by guests at hotels — from 11 to 12 percent. The meals tax will go up form 6 percent to 6.25 percent. (The town’s meals tax is in addition to the 5 percent state sales tax for a new total of 11.25 percent).

The increase in the meals tax will bring an estimated $65,000 of additional revenue to the town. The increase in the occupancy tax will generate an estimated $36,000.

The amended budget passed with a 5-2 vote; Council members Randy Pack and Milton Cook were the only ones to vote against it.

An earlier version of the budget discussed at a May work session included the meals and occupancy tax increases as well as the vehicle licensing fee hikes. Council members initially agreed to the hikes in a budget work session.

Pack, who is part owner of Smithfield Station — a hotel and restaurant complex — has been opposed to the idea of tax increases since the beginning of this year’s budget process and as the Finance Committee Chairman he has the last say on what budget is introduced.

Pack said last night that he realizes that taxes will have to go up from time to time, but once taxes go up they’re not likely to go back down. And this year’s budget didn’t require such a change, he said.

Cook said he voted against the amended budget because he doesn’t agree with an across-the-board five percent pay raise for town employees. He has said multiple times over the last few weeks that knocking it down to 4 percent would solve the need for new revenue streams.

The amended budget did not change any of the expenditures, just the revenue, Town Treasurer Ellen Minga said after the meeting.

Cuts that Pack made to an earlier proposed budget to avoid the combined tax increase and license fee increase are still in place. This means less funding for the Tidewater Free Clinic, Friends of the Library and the Police Department; but, Pack said, they’re still seeing increases compared to this year’s budget.

A new human resources position in the town manager’s office was still included. The addition of this position made the salary increase in the town manager’s office the largest of any department.

“Thank you to everyone,” Williams said after the budget passed. “It’s been a long, hard haul.”  {/mprestriction}