Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, December 3, 1994 TAG: 9412050031
SECTION: CURRENT PAGE: NRV-1 EDITION: NEW RIVER VALLEY
SOURCE: RICK LINDQUIST STAFF WRITER
DATELINE: CHRISTIANSBURG LENGTH: Medium
Allen has called for elimination of what he called a "despised" tax. The levy, which is a tax on business receipts, is also known as a gross receipts tax. It generates $300 million a year for local governments in Virginia and is a significant revenue source for many towns and the city of Radford in the New River Valley.
The Allen plan calls for capping the tax at its current level, then uniformly phasing it out over five years. The governor's proposal would allocate $750 million in state money to compensate localities for the lost revenue during the phase-out period. No money would be provided after that, according to the Virginia Municipal League.
Christiansburg received $400,000 from business license tax revenues during the last fiscal year, about 6 percent of its $7 million general fund budget.
Lemley - who has been town manager for 38 years - said the town has had to deal with such revenue cuts before, when the federal government stopped the revenue sharing program.
"But this is a local revenue source that [Allen] has taken away, and that's a whole different ballgame."
His Radford counterpart, City Manager Bob Asbury, was similarly outraged. "Everybody's screaming," he said.
In Radford, real estate taxes would have to go up almost 13 percent to offset the $300,000 a year the business tax brings in, said Asbury. To make up the difference, the city would have to increase its real estate tax by eight cents per $100 valuation, he estimated.
Other New River Valley officials - alerted to the proposal's impact by a faxed Virginia Municipal League "legislative bulletin" - also were giving their calculators a workout Friday.
Blacksburg would lose the equivalent of the budget for one of its larger departments.
The gross receipts tax is budgeted to bring in $754,000 in revenue in the current fiscal year, or approximately $100,000 more than the town's annual parks and recreation budget, said Town Manager Ron Secrist. Replacing that revenue would mean a jump of 10 cents in the town's 20 cents-per-$100 real estate tax rate.
Pearisburg Town Manager Ken Vittum said the tax's $95,000 in revenues makes it one of the larger line items on his budget. "One of the main questions I have [is] what's going to replace it?" he said.
Next door in Narrows, Town Treasurer Maxine Hypes said the tax brings in $30,000 each year. "That's a lot for us, being so small," she said.
Dublin Town Administrator Gary Elander said the tax contributes $46,000 a year to the town's nearly $551,000 general fund. "That's a major source of income to local government," he said of the tax.
Pulaski Town Manager Tom Combiths was more blunt. "We would prefer the state look elsewhere," he said, pointing out the tax generates approximately $208,000 a year, or 5 percent to 6 percent of the town's general fund revenues.
Pulaski has held the line on real estate and personal property taxes, he said, and depends on a diversity of revenue sources to balance its budget each year.
Montgomery, Giles, Pulaski and Floyd counties don't levy a gross receipts tax. Instead, they levy a merchants capital tax on retailers, based on year-end inventories.
Montgomery Board of Supervisors Chairman Larry Linkous, a Republican, welcomed the governor's tax-cut plan, but didn't want it to be at the expense of local governments. "My only real major concern is that we don't shift" the burden onto the property tax, he said. Counties and towns also could help by working together to provide services and cut down on costs, something Blacksburg, Christiansburg, Montgomery County and Virginia Tech are attempting with a proposed new regional trash authority, Linkous said.
Staff writers Brian Kelley and Ken Singletary contributed information for this story.
by CNB