Members of the Smithfield Town Council went on record last week in unanimous support of House Bill 396, a measure that could increase the local sales tax rate.
If approved, HB396 would give towns like Smithfield the authority to hold a sales tax referendum before voters. The town could then create a new 1/4 cent local option sales tax. The tax would have to be used specifically to improve streets, public safety, infrastructure or go towards economic development.
Town Manager Mike Scott said the resolution to support the sales tax legislation was a decision made at the local level, and not at the request of the League of Municipalities or any other organization.
The Town of Smithfield Resolution to support HB396 was placed in the Council’s Consent Agenda, and although approved unanimously was not openly discussed during the public meeting.
Even before the Town Council voted May 7th to support the taxing option, Johnston County members of the NC House of Representatives said the bill is unlikely to pass this year.
Three days before the meeting, Representative Donna White told JoCoReport, “There were several local bills filed to add local taxes but the committee, in consultation with staff, has decided to not run these local tax bills at this time.”
Representative Larry Strickland agreed. “At this particular time, I do not see passage in both chambers favoring a bill such as HB396. The result of a favorable referendum would enact an additional tax that could be used for improvements such as roads.”
Rep. Strickland said state lawmakers have increased funding for road improvements through Powell Bill funds that will help cities across North Carolina. “The recently passed 2019-2021 House Budget increased the Powell Bill allocation for municipalities in Year One by $14.75 million and Year Two we increased it by another $29.5 million. A total of $177 million will now be in the Powell Bill bucket of money for our towns. Basically, the House majority heard the concerns from our towns and chose the concept of appropriating more of existing tax dollars with the end result being more money for streets.”
State Senator Brent Jackson told JoCoReport, “I don’t see this passing this session.”
Town Manager Scott said the Smithfield Town Council passed a similar resolution in 2018 seeking a local tax increase for infrastructure repairs and maintenance. The proposed 2018 state legislation also failed to pass.