Cig tax rate cut in half, personal property tax increase proposed

The town of South Hill has readvertised its proposed budget for the coming fiscal year with the cigarette tax rate cut in half and an increase in personal property taxes.
The town has scheduled a public hearing on the new budget for Tuesday, May 30, at 7 p.m. at the town hall.
The new budget levies a tax of $0.15 per pack of cigarettes, half of the $0.30 per pack that was originally proposed to mainly fund enhanced law enforcement retirement benefits.
The new budget also includes a tax increase on the personal property rate from $1.05 per $100 property valuation to $1.50 per $100.
The rest of the new budget remains the same as what was originally proposed before business owners in town, mainly those who sell cigarettes, joined with tobacco farmers in the region to express strong opposition to the implementation of a cigarette tax.
The business owners argued the cigarette tax would send their customers outside town limits to do business, while the tobacco farmers noted South Hill’s longstanding heritage and continued status as a hub for the tobacco market.
At the town council meeting last Monday, Town Manager Kim Callis defended the cigarette tax as a means for raising revenues from those who come to South Hill and utilize town services and facilities but don’t live in town while fulfilling the town’s obligation to its residents to keep tax rates low.
Council member Ben Taylor said implementing a cigarette tax is an alternative way to raise revenues without increases rates for the traditional tax levies.
Callis also gave a brief overview of the $23.57 million proposed budget, an increase of more than $5 million over the current fiscal year’s budget, and explained certain aspects of it.
The proposed general fund expenditures are $14.3 million, an increase of $2.3 million, and the proposed water and sewer expenditures are $9.3 million, an increase of $3 million.
An increase of $0.45 per 1,000 gallons is proposed in the water rates to help fund the water and sewer budget.
Callis said $4 million will go toward the northside sewer infrastructure project. He said the town is at capacity with its Mountain Creek pump station, which services the north side of town, and the infrastructure project will help meet current demands and also future demands with the new hospital and hotel being constructed as well as other commercial and industrial development.
“If we don’t do this sewer project we’ll be in a situation where we’ll be pumping and hauling sewer, and that is not a situation anybody wants,” he said.
Another $1.5 million will go toward northside water infrastructure upgrades.
As for the general fund, Callis noted a $90,000 increase in the town manager’s office funds a new position to help attract industrial and commercial development. The town council approved a 3 percent raise for Callis at April’s regular meeting, his first raise since July 2016.
The proposed budget includes a 3 percent employee cost of living adjustment as well as a medical insurance premium increase. After receiving bids from five insurance companies, Callis said the town’s medical insurance premiums increase by 18.5 percent for traditional plans and almost 40 percent for high-deductible plans.
The new ladder truck with a 100-foot aerial platform for the fire department costs $1.25 million, which will be paid for through the fund balance and not tax increases. The existing 1976 model, 75-foot ladder truck will be sold, with funds gained going toward the purchase of the new apparatus. Callis said the upgrade is needed with the construction of the new hospital (VCU Health Community Memorial Hospital is contributing $75,000 to the ladder truck purchase) and will help with town residents’ insurance premiums.
The police department budget increases from $1.92 million to $2.5 million. Callis said the primary upgrade is to the information technology systems officers have in their vehicles, which will make more information available to officers in the field and improve efficiency with reporting. He said much of the upgrade is funded through grants.
“If we are unable to get the grants, then we will delay implementation of it,” Callis said.
Otherwise the town is replacing four police vehicles (one through a grant) and buying 22 body cameras (all paid for through a grant), six rifles and pistols with siglights,
The Highway 1/138 traffic project, which is taking place at the intersection where the new hospital is being constructed, costs $2.4 million, with $1.1 million paid for through a Virginia Department of Transportation revenue sharing program.
Noting the new hospital and hotel under construction as well as Love’s Travel Plaza, Callis said, “You’re going to see traffic grow and grow in that area. We hope to attract an industry to Hillcrest Industrial Park. We were close to having one with 700 jobs, and it didn’t work out. When that happens, you can imagine the traffic that we will have, and we have an obligation to make that intersection as safe as possible.”
The new public works building being constructed at the site of the former Exchange Warehouse on W. Danville Street costs $1.6 million, all funded through the fund balance and not tax increases. The site is adjacent to the current public works facility and will be used to store equipment and salt and host community events. Callis said the building should be ready for use by next spring.