Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, February 1, 1993 TAG: 9302010271
SECTION: VIRGINIA PAGE: A3 EDITION: METRO
SOURCE: Joel Turner Staff Writer
DATELINE: LENGTH: Medium
FISCAL STRESS? WE HAVE IT ROANOKE'S TAX LOAD NO. 10 IN VA.
It's not the kind of ranking to boast about. It's not something you'll see in tourist brochures or promotional ads.Among 136 cities and counties in Virginia, Roanoke ranks 10th in "fiscal stress," a measurement of financial pressures on the city.
Fiscal stress is a composite index of the city's tax base, tax revenues and median income level of residents. The index measures a locality's financial condition and compares it with other localities.
The high ranking means that Roanoke faces a tight financial squeeze to keep providing its current level of services with its tax base and tax rates.
According to a report by the state's Commission on Local Government, Norfolk ranks at the top of the stress list, with Petersburg second.
By comparison, Salem ranked 31st and Roanoke County 91st.
Roanoke was classified as a "high" stress city. Salem was rated as "above average," and Roanoke County was "below average."
The report covered fiscal 1990, the last year for which figures were available.
City Manager Bob Herbert and other city officials cited Roanoke's ranking at a recent financial planning session with City Council.
"Although [the index] is not an absolute indicator of financial hardship, it enables you to make comparisons between localities," said Barry Key, manager of Roanoke's Management and Budget Department.
It shows the recession has been felt in city hall.
Herbert said the city's fiscal stress has increased because state aid has not kept pace with inflation and because local tax revenues are growing slowly.
State and federal revenues increased by 2.8 percent a year in the past five years, 1.7 percentage points below inflation. Local taxes increased by 5.9 percent a year, 1.4 percentage points above inflation.
Herbert said the city will have to rely more heavily on property taxes until the economy recovers and other taxes - such as admissions, sales and utility - begin to grow again.
Real estate tax revenues have increased by 7.1 percent a year in the past five years, mainly because of $240 million in new commercial and residential development.
Roanoke's low median income for individuals was one reason for its high-stress rating.
The city's median income was $15,587 in 1990, nearly $3,000 below the average for major cities in the state.
Roanoke ranked 25th lowest of 136 localities in median income.
Salem's median income was $19,305 and Roanoke County's $23,365.
Roanoke ranked 69th in revenue capacity, which is the amount of tax money that would be available if the statewide average rate for each tax were applied to the city's tax base.
Roanoke ranked 12th in tax effort, a measurement of a locality's effort to raise the revenue that is potentially available.
Part of that tax effort has been directed at providing more money for schools.
Educational spending per pupil in Roanoke was $5,995. That's higher than the average for other major cities, $5,612, in fiscal 1991.
Salem spent $5,350 on each pupil and Roanoke County $5,246, according to the state school superintendent's report on educational spending.
The city also spends more on public safety, health and welfare services than the other valley governments.
Roanoke spent $268 per capita on public safety, compared with $230 for Salem and $125 for Roanoke County, according to the Comparative Report on Local Government Revenues and Expenditures for fiscal 1991.
Roanoke's health and welfare expenditures were $196 per capita; in Salem it was $64 and in Roanoke County $60.
Herbert expects the city's expenditures to increase at a rate slightly above that of inflation over the next several years. The average growth rate in spending has been 1 percentage point above inflation.
He said the city faces an immediate funding problem for the upcoming budget because projected expenditures are expected to exceed revenues even without a pay raise for city and school employees.
Herbert said he won't recommend any increase in the real estate and personal property taxes, even though the city also has urgent capital needs. These include the Hotel Roanoke/Conference Center and expansion of the City Jail, juvenile detention home and the sewage treatment plant.
Council will meet next month to decide how to finance the projects and whether a bond referendum will be held.