Smithfield’s proposed 2022-23 budget includes what Town Manager Michael Stallings termed a “temporary” 13-cent reduction in the car tax rate.

Isle of Wight County supervisors voted in March to lower the county’s personal property tax rate by 60 cents to $3.90 per $100 of a vehicle’s assessed value. Had the tax remained at last year’s rate of $4.50 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.

Gwaltney attributes the sharp rise in valuations to a nationwide drop in new and used vehicles 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 proposed lowering of the rate to 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 find themselves paying an extra $73 or more in taxes just to the town this year were Smithfield’s tax rate to stay 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 proposed 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 proposed 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 also includes a minimum 4% raise for all town employees, with those on lower pay grades capped at15% 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.

Smithfield Town Councilman Randy Pack noted a 105% increase in the town’s parks and recreation budget and a 140% increase to its funding for public buildings, both of which he said are largely 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 funds toward adding football field lights and other amenities at the Joseph W. Luter Jr. Sports 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.

Pack, at the town’s May 3 meeting, also suggested leaving the town’s contributions to local nonprofit agencies flat at just over $65,000 rather than the $80,527 total the agencies had requested. The agencies most affected by the lower-than-requested contributions would be the Genieve Shelter and the Western Tidewater Free Clinic.

Vice Mayor Michael Smith and Councilman Wayne Hall, however, said they favored leaving the contributions at the $80,527 the nonprofits had requested.

The council will hold a May 23 public hearing on the proposed budget at 5:30 p.m. following its committee meetings. Adoption of the budget is slated for June 7.