Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, February 18, 1993 TAG: 9302180441
SECTION: EDITORIAL PAGE: A-11 EDITION: METRO
SOURCE: RAY L. GARLAND
DATELINE: LENGTH: Long
FISCAL STRESS
NORFOLK was made by its superb anchorage; Richmond by railroads, tobacco and state government; Roanoke by the Norfolk & Western and large helpings of rugged individualism. A lifetime ago, when Northern Virginia was a pastoral scene and most rural counties in a condition of economic lassitude, the state looked to these three cities as harbingers of future prosperity, and many made tracks in their direction.Our annexation laws worked with relative ease to expand city boundaries, and many county residents saw them as progressive. But there were forces gathering that took history in a different direction.
While these cities still have a lot going for them, and are too quick to wallow in pessimism, it's clear they face serious internal problems without much hope of outside deliverance. In both Congress and the General Assembly, the votes are in the suburbs, and it's rare that politicians will extend a helping hand to constituents not their own.
Besides, the evidence is fairly clear that when the cities get large infusions of cash, it's quickly swallowed up. More often than not, their internal politics dictate that fresh money goes first to improve wages and benefits for government employees who choose, increasingly, to live in the suburbs beyond.
The issue of residency requirements for local-government employees surfaced at this year's assembly when the two state senators representing Richmond took strong stands on opposing sides of the question.
Richmond now requires all employees occupying higher pay-grades to live in the city, in addition to all new police officers and firefighters. After losing once in committee, Richmond Sen. Joe Benedetti, the Republican candidate for attorney general in 1989, has gained Senate approval for a bill prohibiting residency requirements for most local-government jobs. He was fought every step of the way by Henry Marsh, the city's Democratic senator and longtime mayor.
This is undoubtedly a complex and troublesome subject about which we will hear a great deal more. While there's justice in the argument that those who earn their living from the public purse should share the economic and political boat of those they serve, it runs counter to a strong American sentiment favoring freedom of choice. The courts have generally approved residency requirements provided there was a rational basis for them.
When they were strong and prosperous, the central cities invited many of the problems they now face by rushing to take advantage of the federal largess to build public housing. The cities seemed willing to act as repositories of the nation's social problems, which then were dumped in their lap. Making poverty your No. 1 growth industry turns out to be not a very smart economic-development decision. Cut off by the state legislature from further annexation, the cities were placed between the proverbial rock and a hard place.
All this is highlighted in a recent report by the Virginia Commission on Local Government purporting to measure the "fiscal stress" experienced by the state's 136 cities and counties. It wasn't surprising to find that the 10 localities facing the highest fiscal stress were all cities: Norfolk, Petersburg, Richmond, Portsmouth, Covington, Emporia, Hopewell, Norton, Charlottesville and Roanoke - in that order.
Generally, the cities are spending more per capita on education, public safety, health and welfare - and are doing it from a smaller personal-income base than the suburban counties. In the past, this had been masked by a fairly generous stream of federal aid. But as deficits mounted and political influence swung away from the cities, that stream began to dry up. In Roanoke over the past five years, state and federal aid has grown by only 2.8 percent a year while local tax revenues grew by 5.9 percent.
The sad truth is that if the cities try to maintain traditional increases in levels of local spending by relying mainly on local taxes, they may end by accelerating the flight of both business and middle-class homeowners to the counties. The good news is they now seem alive to the danger. The bad news is they still don't know what to do about it.
Expectations for a renewed bonanza of federal and state aid are unrealistic. The federal government has spending programs already in place whose natural growth will consume every dime to which it can lay claim - to say nothing of reducing the deficit.
While Virginia isn't now a high-tax state, a study undertaken by the staff of the Finance Committee of the House of Delegates indicates that existing obligations will require $440 million in new revenue for the 1994-96 budget before any consideration is given to cost inflation or the wisdom of increasing state outlays.
Of course, some of these "obligations" - such as ending the sales tax on nonprescription drugs now set for July 1, 1994, or bringing the state income tax into conformity with certain recent federal preferences - can be further postposed. But the most the cities can hope for in the next budget is for the state to put up its share of a more generous round of pay hikes for teachers.
It's not that I don't see plenty of "needs" out there that could easily justify higher taxes. But that's the road we've traveled lo these many years, and it's just hard to see the wisdom of going faster down it than absolutely necessary. Every base you build becomes a point of departure for every increase, and many of those demanding the same level of growth they've known in the past forget that the higher you go, the more it takes to equal the same percentage.
The problem with the legislature giving cities and counties a local income tax is that the counties might use it to cut property taxes while the cities didn't. But the assembly could help both counties and cities by establishing fair, uniform taxes on cigarettes, lodging and restaurant meals that would be collected by the state and remitted to the localities.
Ray L. Garland is a Roanoke Times & World-News columnist.