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South Hill eyes cigarette tax to fund $23.6 million budget

SoVaNow.com / April 12, 2017
South Hill’s proposed $23.6 million budget for the coming year calls for adding a 30 cent-per-pack tax on cigarettes and increasing in-town water and sewer rates by 45 cents for each 1,000 gallons used.

Town Manager Kim Callis unveiled the draft 2017-18 budget at Monday night’s meeting of South Hill Town Council. The town must have a new budget in place by the start of the new fiscal year on July 1.

All other town taxes — including real estate, personal property and machinery and tools levies — remain unchanged under the proposed budget.

While new to South Hill, local cigarette sales taxes are currently levied by 91 local governments, two counties, 30 cities and 59 towns in Virginia. Tax rates charged by towns generally range from $0.28 per pack to $0.47 per pack, Callis explained.

The budget projects that general fund expenditures will come in at $14.3 million, which would mark a $2.3 million increase over the current 2016-17 fiscal year. (The current fiscal year ends June 30). The budget also pegs spending of $9.3 million for water and sewer, which is a $3 million increase over the current year.

The cigarette tax will help to pay for the cost of enhanced law enforcement officer retirement benefits (LEO), Callis said, adding that “this benefit is important in the recruitment and retention of qualified police officers.” Callis conservatively estimates raising $150,000 from the cigarette tax, which is not enough to cover the increased expenditures projected for the police department. The proposed police budget is $2.5 million, a $600,000 increase over the current fiscal year.

Callis said other new expenditures driving the budget are highway improvements at the intersection of Routes 1 and 138 near the new hospital, which will cost the town $2.4 million; construction of a new public works building on Danville Street at a cost of $1.6 million; and the purchase of a new ladder truck for the fire department, costing another $1.3 million.

In-town water rates will go from $5.55 to $6.00 per 1,000 for the first 10,000 gallons consumed. For consumption between 1,000 and 10,001 gallons, the rate will rise from $5.20 to $5.65 per thousand, and for usage between 10,001-50,000 gallons, the rate will go from $3.95 to $4.40 per thousand. For usage above 100,000 gallons, the rate will increase from $3.80 to $4.25 per thousand.

Out-of-town water rates are set to remain unchanged, but since sewer rates are fixed at 110 percent of the water rate, in-town sewer rates will also increase.

The increased revenue for the water and sewer fund, Callis said, will help cover the cost of major infrastructure additions and improvements needed to meet increasing regulatory requirements and greater demand for service resulting from economic growth.

A final budget will be prepared once the town office receives information on employee health insurance premiums for the coming year. Still, Callis asked Council members on Monday night to advertise for and hold a public hearing on the proposed budget and tax rate increases. The hearing will take place Monday, May 8 at 7 p.m. at Town Hall. Adoption by Council of the final budget and appropriation of funds is scheduled for June 12.

Councilman Mike Moody asked Callis to provide a breakdown of LEO benefit costs for other locations ahead of the final vote. He also expressed concern over how to pay the LEO costs and meet Callis’ other expenditure targets if actual revenues from the tax are less than anticipated. Callis replied, “We have enough money to get through the year if we fall short.”

In other business, Callis unveiled the proposed design for the town’s 20,000 square foot multi-purpose public works and community events facility on Danville Street.

“The staff has been working with B&B Consultants and Solex Architecture on the site layout and building design,” Callis said. The front façade and sides will be brick. The building will include two loading doors on the front and two additional loading doors on the back. Lighting will be done with LED lights.

The first floor will have restrooms for both men and women. An additional facility with a shower is located on the second floor. Callis said there are enough toilets to accommodate an event for 900 people.

The building will be located at 408 West Danville Street, the site of the former Exchange Warehouse that was demolished last year. It will be used primarily to store Public Works Department equipment, but will also be available for community related events.

R.F. Howerton was the low bidder on the project, coming in at $1.519 million. Monday night, Council members approved awarding Howerton the construction contract. Callis said he anticipates the project will be complete in early spring 2018 at a cost of $1.6 million, including engineering and architectures fees.

Money for the building is included in the Town’s budget.

In other business, Town Council adopted a resolution endorsing a Local Innovation Grant for the Southside Virginia Food Hub. Callis said on Wednesday, April 5, the Department of Housing and Community Development (DHCD) told Debra Gosney of Southside Planning District Commission that there are funds available to pay for operating costs for the Southern Virginia Food Hub being developed by Ann Taylor-Wright. The application was due April 7.

Wright has already received funding from the Virginia Tobacco Commission and DHCD to cover building renovation and equipment costs.

Callis said the grant application for $271,800 for operating costs was prepared and submitted in timely fashion, but as part of the application process the town must endorse the grant and authorize the town manager to perform certain duties relative to the grant, including signing grant documents.

Assuming the request is approved, Taylor-Wright’s timeline for the food hub project calls for her to procure an architect this month, finalize design and engineering plans in June, select a contractor in August, begin construction in September and open in April or May 2018.

Stephen E. Watkins Jr. was appointed to the South Hill Industrial Development Authority. He will succeed Richard Walker when his term expires on May 5. Walker has been a member of the town’s IDA for 24 years

Tyler Howerton, a current member of the IDA, was reappointed for an additional four years when his term expires on May 6.

South Hill Dixie Youth will be hosting several tournaments in June and July.

Optima Health selected the Town of South Hill to appear in a billboard ad and a short promotional video will be made about the town. The ad will feature Carie Watters, Clifton Bullock and Eric Hudson, Callis said.

“We will be notified as to the exact location of the billboard when it is completed,” Callis explained, “and we will receive a framed copy for Town Hall.”

Bill Wilson gave the annual water report. He said remediation steps being taken by the public works department, which includes flushing of the water lines at “distal locations,” appear to be working as the buildup of disinfection byproducts from the treatment process is not excessive – not outside the legal limits.

Water operators try to control the conditions that cause the byproducts to form, Wilson explained, and the most common condition is aged water after treatment. That is why he and his staff flush certain lines at least every month, some every two weeks. The main lines that are flushed are those that show the greatest propensity for byproduct buildup. They are Forest Lane and Route 1 North.

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