Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, April 19, 1990 TAG: 9004190808
SECTION: VIRGINIA PAGE: A/1 EDITION: EVENING
SOURCE: JOEL TURNER MUNICIPAL WRITER
DATELINE: LENGTH: Long
He's willing to take political heat for proposing higher taxes and fees.
Herbert recommended this week that the city raise $1.3 million by increasing its cigarette tax and beginning to prorate personal property taxes; $829,600 would go to the schools in the next fiscal year and the rest would be spent on other services.
"The city is doing precisely what it agreed to do during the con- solidation negotiations," Herbert said.
Still, some questioned whether the city's effort to keep its schools pledge might ironically generate opposition to consolidation among county voters - not support, as it hoped.
It's partly a matter of timing and partly a matter of perceptions about taxes: Just when the county is cutting its real estate tax rate, the city is considering an increase in some taxes and fees.
Herbert recommended the increases less than a week after the Board of Supervisors voted to reduce the county's real estate tax rate by 2 cents in the next fiscal year - from $1.15 to $1.13 per $100 assessed value.
The situation might tend to reinforce the perception among some county voters that the city has high taxes and the county has a more efficient government, said Councilman Howard Musser.
"Perceptions can become reality for some people. There is a perception by some that the city has high taxes," he said.
Musser, who helped negotiate the merger plan, says that perception is inaccurate. But he wonders whether some county voters might note that the city is raising some taxes in the same year when the county is cutting taxes.
In making his recommendations, Herbert said he did not consider either the timing or the possible effect on the consolidation referendum that is expected to be held in November.
"I looked at the capital and operating needs of the city and the needs of the school system, and I recommended a budget that will move the city into the 1990s," he said. "I did not consider political implications. As a professional, I did my job."
Among Herbert's recommendations: doubling the city's cigarette tax from 5 to 10 cents a pack to produce an additional $400,000 and prorating personal property taxes to generate an estimated $365,000 in the next fiscal year.
And Herbert urged that the city's real estate tax rate remain at $1.25 in the next fiscal year. Despite a 6 percent increase in assessments, he said the city could not afford to cut the real estate tax rate now if it wanted to retain the same level of services.
If consolidation had been in effect this year, the city's real tax rate would have been $1.23, and the county's $1.10, based on budget documents prepared by the merger negotiators.
The supervisors' decision to reduce the county real estate tax rate caught some city officials by surprise, particularly because county schools are faced with a $1 million deficit this year because of overspending on an expanded dropout-prevention program.
Herbert won't comment on the supervisors' decision to lower the county's rate, but he said he doesn't think the city's plan to raise some taxes and fees will have any effect on the consolidation issue unless the news media makes it an issue.
Herbert is angry about the headline on a front-page newspaper story about his proposed budget and recommendations for the fiscal year that begins July 1. The headline said: "City Tax Increase Urged."
It contrasted sharply with the headline a week ago when the supervisors voted to lower the county real estate tax rate: "County Tax Rate to Drop."
Herbert said he thought the headline was unfair because he did not consider his recommendation to be a tax increase.
When the word "tax" is used, Herbert said he believes that most city residents and newspaper readers think of real estate taxes. He thinks it was inaccurate to describe a proposed increase in the cigarette tax, proration of personal property taxes and increases in several city fees as a tax increase.
"I hope this is accurately portrayed because we are simply doing what the county has done for years," the city manager said. "The county has prorated personal property taxes and it has tried to do everything it could to get the authority to levy a cigarette tax."
The proration of personal property taxes would require the motor vehicle owners to pay taxes for the period of time they own the vehicles each year, similar to the system that is used in the county. Currently, city residents who buy vehicles after Jan. 1 don't have to pay taxes on them until the following year.
City and county officials agreed that personal property taxes would be prorated in both localities if voters approve consolidation.
State law bars the county from enacting a cigarette tax. The county has tried unsuccessfully to persuade the General Assembly to give it the power to tax cigarettes.
Ironically, a higher city cigarette tax could give smokers in both the city and county cause to vote against merger if they want to avoid the tax.
During the consolidation negotiations, city and county officials agreed that all school programs would be raised to the highest level in either locality by 1993, when merger would take place.
They estimated it would cost $3.7 million to bring city school programs into parity with the county, and $1 million to bring county programs to the city's level.
Herbert has proposed that the city phase in its changes over the next three years, expanding its kindergarten program, hiring more remedial teachers, instituting a seven-period day for high school students and expanding a dropout-prevention program.
Herbert said almost every city in Virginia has a cigarette tax and the tax is at least 10 cents a pack in most cities.
Councilman David Bowers, an advocate of merger, said he doesn't think Herbert's recommendations will have any adverse impact on the consolidation referendum.
"Rather than being a bump in the road, I see it as merging our tax structure with the county's. We are just coming into step," Bowers said.
Bowers said he expects both the city and county may have "some uncomfortable short-term problems," such as the $1 million deficit in the county's school budget and the city's proposal to raise the cigarette tax and other fees.
"But the voters ought to look at the long-term benefits and solutions that would be provided by consolidation," he said.
Lela Spitz, a leader in an anti-consolidation group in the county, said the recent developments on tax issues in the city and county are almost humorous.
Spitz said the city is talking about raising taxes even though city officials contend consolidation will save money. And she thinks the supervisors' decision to cut county real estate tax rate was almost humorous, too, because she thinks the rate will increase if consolidation is approved.
"It would be funny if it wasn't so serious," she said.
Consolidation foes will have more to say about governmental finances in their campaign to try to persuade voters to reject merger, she said. They claim that a merged government would be more expensive.
by CNB