Smithfield homeowners can expect to pay more in real estate taxes than they did last year when the town’s bills are mailed in April.

Eight months after voting to set Smithfield’s 2024 real estate rate at 14 cents per $100 in assessed value, the Town Council revoted 5-2 on Feb. 6 to instead set a 16-cent rate for the current year.

The council had adopted the 14-cent rate to offset an average 34% rise in single-family home valuations during Isle of Wight County’s 2023 reassessment. The council’s stated goal, at the time, was to remain “revenue neutral,” or to take in roughly the same dollar amount the prior year’s 19-cent rate had produced under the county’s 2019-assessed property values. State law requires counties reassess real estate values every four years.

Under the new 16-cent rate, the revenue-neutral scenario is no longer the case. According to a public notice the town placed in The Smithfield Times’ Jan. 3 edition, a 14.8-cent tax rate would be needed to fully offset the impact of the 2023 reassessment. The notice refers to the 2.2-cent, or 8.1%, difference from the revenue neutral rate as the “effective tax rate increase” homeowners will pay.

Councilman Randy Pack, who joined newly appointed Councilman James Collins in casting the dissenting votes, said the 16-cent rate would add roughly $260,000 to the town’s coffers “out of taxpayers’ pockets.”

Pack contends the town doesn’t need the extra money. A recent audit by the accounting firm Robertson Farmer Cox states the town ended its 2022-23 fiscal year on June 30 with $12.7 million in its general fund, or 128% of the prior fiscal year’s budgeted expenses. Town policy requires only that a minimum of 25% be on hand at any given time.

Mayor Steve Bowman, however, contended adopting a 16-cent rate this year could defer having to again raise taxes at the July 1 start of the town’s 2024-25 fiscal year should the General Assembly pass legislation raising Virginia’s minimum wage. House Bill 1, which passed the House of Delegates in a 51-49 vote on Feb. 2 and is currently pending in a Senate committee, would raise the minimum wage from $12 per hour to $13.50 effective Jan. 1, 2025, and to $15 per hour on Jan. 1, 2026. Currently, the lowest-paid town employees earn $12.50 per hour.

“I’d hate to see us having the same conversation again next year,” Vice Mayor Valerie Butler agreed.

Achieving the 14-cent rate without cutting the town’s $10.2 million 2023-24 budget had involved committing just over $413,000 in one-time COVID-19 pandemic relief funds from the 2021 American Rescue Plan Act, or ARPA. The new 16-cent rate won’t require subsidizing the town’s budget with ARPA funds.

Councilman Michael Smith, who’d cast one of three dissenting votes on the 14-cent rate in June, this time joined with Bowman, Butler, Councilman Jeff Brooks and newly appointed Councilman Raynard Gibbs in supporting the 16-cent rate. One of Smith’s main objections to the 14-cent rate adopted in June had been its reliance on ARPA funds to balance the budget.

ARPA is “going to disappear sooner or later,” Smith said.

Brooks, who in June had voted in favor of the 14-cent rate, said at the Feb. 6 meeting he’d changed his views.

“The 16 cents makes sense to me,” Brooks said.

Prior to the vote on the 16-cent rate, Pack made a motion to adopt a 15-cent rate, which Collins seconded, but it failed when only he and Collins supported it.

 

Why revote now?

Virginia law requires governing bodies hold separate public hearings on its budget and tax rate when the advertised rate during a reassessment year would exceed 101% of the prior year’s real estate revenue. The town had advertised a 17-cent rate in June that would have brought in an additional $500,000 or 115% above last year’s revenue based on the 2023 reassessment.

The council had overlooked this state law provision when holding a combined June 6 hearing on its budget and tax rate. Town Attorney William Riddick notified the council in November that its 4-3 June vote had also run afoul of a law requiring a two-thirds majority to set tax rates, or at least five of the council’s seven members.

The council had planned to revote Nov. 7, but the state-required advertisement that ran in The Times’ Oct. 25 edition, according to Riddick, gave only the standard two-week notice and not the 30-day window required for public hearings pertaining to tax increases. Bowman and Riddick rescheduled the required hearing for Feb. 6 to give its two new council members – Collins and Gibbs – time to acclimate to their new roles. Both were appointed Dec. 19 to fill newly elected Isle of Wight County Supervisor Renee Rountree’s and ex-councilman Wayne Hall’s vacated Town Council seats until a special election can be held in November.