Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 24, 1993 TAG: 9301240158
SECTION: VIRGINIA PAGE: D6 EDITION: METRO
SOURCE: JOEL TURNER STAFF WRITER
DATELINE: LENGTH: Long
ROANOKE MANAGER SAYS TAX INCREASE NOT ANSWER
City Manager Bob Herbert told Roanoke City Council members what they wanted to hear Saturday.Despite a bleak financial outlook that could produce a $1.5 million budget shortfall in the next fiscal year, he won't recommend an increase in real estate or personal property taxes.
"I'm not going to be asking for any increase in our major taxes. We have enough of a burden on our citizens now," he said.
Herbert said he will make budget cuts and other adjustments to make up the shortfall.
One cut could be eliminating backyard garbage collection, a change that would save taxpayers $370,000 a year. Herbert proposed that last summer, but no action has been taken on it.
"We are in a cutting mode, not increasing taxes," he said at a financial planning meeting with City Council.
But he did not disclose other possible cuts. He will submit the budget to council in April.
The no-tax-increase budget might not be enough for Councilman James Harvey, however. Harvey, who has wanted to reduce the real estate rate of $1.25 per $100 assessed valuation of property in the past two years, said he has not abandoned his effort.
"I still hope we can find a way to provide some tax relief," Harvey said. "We haven't given any relief to taxpayers in five or six years."
Council last reduced the real-estate tax rate in 1988, trimming it from $1.29 to $1.25.
The budget crunch will be heightened by a small increase in local tax revenues and state aid that has fallen below the inflation rate in recent years.
Acting Finance Director James Grisso has projected an increase of only 2 percent in revenues in the fiscal year that begins July 1. The budget would be $162 million, up $3 million from $159 million.
Grisso predicts the city's economy will continue to improve in the next fiscal year, but he said it will be at a slow pace.
The national economy is projected to grow by 2 percent to 3 percent in the next year, but Grisso predicts Virginia's economy will grow more slowly because of the reductions in defense spending.
Herbert said the city faces substantial cost increases in several budget categories: $1 million in landfill dumping fees; $910,000 for hospitalization insurance fees for city employees; $500,000 for a 1 percent merit raise for employees; and $250,000 for children's foster care.
Herbert said the shortfall will be larger if council makes adjustments to the city's pay plan that has produced a storm of controversy. That could be a substantial amount, city officials said, depending on the outcome of the controversy.
The $1.5 million shortfall includes a deficit of $363,843 in the preliminary budget for the school system that provides a 1 percent pay raise for school employees.
Herbert said the city will have to rely more heavily on property taxes because of reductions in state aid for localities and the slow economic recovery.
Barry Key, manager of the city's Management and Budget Department, said there has been a $4.5 million shift in the city budget - from state to local property taxes in the past five years.
In 1988, state funds accounted for 36.6 percent of the budget and property taxes accounted for 29.3 percent. Now, the state provides only 33.8 percent of the funds and property taxes account for 32.2 percent of the budget.
"This a disturbing trend," Harvey said. "We are having to rely more and more on property taxes. The state won't pay its share."
"This puts more stress on our taxpayers," Herbert said.
Councilman Howard Musser said the General Assembly should give local governments more taxing power if it expects them to assume a larger part of the cost for schools and other services.
Musser said the state should stop imposing more mandates on local governments without funding them.
Harvey said the legislature ought to give localities the right to levy an additional one-half cent local option sales tax. This would generate $6 million for Roanoke.
Key said the city has been able to provide more real estate tax funds without raising the tax rate because of new commercial and residential development, proration of personal property taxes and more aggressive collection of delinquent taxes.
At the planning session, Key reviewed trends in the city's finances during the past five years and compared with other localities.
Roanoke's taxes are generally comparable to other similar-sized cities, he said.
A study by the Commission on Local Government shows Roanoke is classified as one of the highest "fiscally stressed" cities in the state - ranking 10th among 136 localities.
Stress is based on a locality's tax capacity, tax effort and median income of its residents.
Roanoke ranked 10th because of its average tax capacity, above-average tax effort and below-average median income, Key said.
Despite the city's financial strain, council must find a way to finance several major projects. These include the Hotel Roanoke/Conference Center and the expansion of the city jail, Juvenile Detention Home and Sewage Treatment Plant.
Council will meet with Herbert next month to consider the financing for them.