Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, May 5, 1993 TAG: 9305050244
SECTION: VIRGINIA PAGE: A1 EDITION: METRO
SOURCE: JOEL TURNER STAFF WRITER
DATELINE: LENGTH: Medium
On a 4-3 vote Tuesday, City Council decided to trim the real-estate rate by 2 cents - from $1.25 to $1.23 per $100 assessed valuation of property.
Councilman James Harvey said the cut is long overdue, adding the real-estate rate has not been reduced in five years despite higher assessments.
During that period, council has added taxes, increased other taxes and raised several fees, he said.
Harvey said he has asked for a cut in the real estate rate for three consecutive years, but City Manager Bob Herbert has not recommended it.
"If you want my vote on the budget, you'll have to come back with a reduction in the real-estate rate," Harvey told Herbert.
Before council's first budget session was finished, Harvey had the support of three other council members - Mayor David Bowers, Howard Musser and William White.
Vice Mayor Beverly Fitzpatrick joined Elizabeth Bowles and Mac McCadden in opposing the cut.
Fitzpatrick said he was concerned that the uncertain economy, combined with the loss of 4,000 jobs within a 50-mile radius of Roanoke, could erode city tax revenues and cause a financial crisis.
"The loss of retail sales could affect our sales taxes," Fitzpatrick said.
The tax cut would produce a $12 savings for the owner of a $60,000 house in the next year, depending on when it becomes effective.
The city levies the real-estate tax on a fiscal year basis, meaning the cut would become effective July 1, unless council shifts it to the calendar year.
Herbert raised the possibility of delaying the cut until Jan. 1 so that the city would absorb only half of the revenue loss in the next fiscal year.
Council told him to check with City Treasurer Gordon Peters to see if this would cause problems in collecting the taxes.
Each penny in the real-estate rate generates $282,000 a year. A 2-cent reduction would mean the loss of $564,000. If the cut takes effect Jan. 1, the city would lose $282,000 in the next fiscal year.
Council also increased the income ceiling - from $22,000 to $24,000 - for eligibility for the real estate tax freeze for elderly homeowners.
Homeowners age 65 and over will be able to avoid real-estatetax increases if they make less than $24,000 and meet the net-worth requirements.
City officials said the increase in the income ceiling will cause the loss of $40,000 in revenue a year.
Combined, the real-estate cut and the higher ceiling for the tax freeze could force Herbert to cut the $129.7 million budget by $604,000 unless the effective date is delayed to Jan. 1.
Herbert said that if the cut is half that, $302,000, he believes he can make reductions that will be more acceptable to council.
Herbert's problem has been made tougher because council hasn't decided whether the school officials will have to absorb any of the required budget cuts to reduce the real-estate tax rate.
Council voted Tuesday to provide an additional $155,000 for the schools to hire more guidance counselors and elementary teachers to lower the pupil-teacher ratio. Council members cannot dictate to school officials how funds are spent, but they can make suggestions.
White said the additional $155,000 will come from real-estate recordations that are being returned to the city by the state. He also suggested that some tax-revenue estimates could be revised upward.
White, a former School Board member, said he believes that the city should try to lower the pupil-teacher ratio in the elementary grades.
These funds for the schools will be in addition to the $85,000 that was provided earlier by Herbert to supplement the $69.8 million budget approved by the School Board.
Council told Herbert to talk with school officials about sharing part of $604,000 in cuts, depending on the timing of the tax reduction.
But some council members wondered if it made sense to ask school officials to cut their budget at the same time they are being given more money.
"Is the school budget untouchable?" Herbert asked.
Harvey said it isn't, but he added that Herbert may have "to swallow" all of the cuts.
Council is expected to discuss the issue today when it meets with the School Board.
by CNB