Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, December 13, 1994 TAG: 9412130058
SECTION: EDITORIAL PAGE: A4 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
Virginia Gov. George Allen is perhaps outbidding most politicians, however, by explicitly proposing cuts not only in the taxes of his own jurisdiction, but also in those of Virginia's cities, counties and towns.
He and others tend to be less specific about how lost revenues will be offset. At the federal level, some of those pushing tax cuts also urge balanced budgets and oppose any reduction in middle-class entitlement programs or military spending, which provides a certain comical air.
In Virginia, Allen provides comic relief by talking vaguely of new efficiencies and belt-tightening (as if the fiscally conservative policies of former Gov. Douglas Wilder during an era of recession-induced revenue shortfalls had left local and state governments bloated with lard), while at the same time pursuing costly new initiatives. The governor's no-parole policies, for example, are popular but must be paid for, though the full tab may not come due until after Allen has left the governorship. (Another disconnect between action and consequence.)
Allen urges a state-forced end to the local-option tax for business and professional licenses. Granted, that isn't the same as if the feds were to try to tell the states that they couldn't levy, say, state sales taxes. Ultimate authority for local taxation in Virginia clearly rests in Richmond. Nor, for that matter, is a business-license tax necessarily a good way for localities to raise money.
Allen would have done well, very well, to recommend that localities be authorized to impose another, better kind of tax to take its place. A local income tax, in particular, would make sense. Instead, the governor would temporarily replace the lost local revenues with extra state appropriations to localities. This assumes, of course, that the state will be in a financial position to do so.
Even assuming this, the subsidy under the governor's plan would end after five years. Absent new taxing authority of some kind, localities likely would have to turn to real-estate and property taxes to make up the money.
The amounts are not trivial. To use the real-estate tax to offset revenue loss from abolition of the tax on business and professional licenses, for example, Roanoke city would have to raise the former by 28 cents per $100, or 23 percent; Salem, 27 cents, or 23 percent; Bedford city, 11 cents, or 15 percent; and Roanoke County, 9 cents, or 8 percent.
Allen's proposal is anti-urban. The tax on business and professional licenses is generally more important to cities than their suburbs, and more important to suburban counties than rural ones. Makes sense: Revenues from a tax on business and professional licenses will tend to be greatest where business and professional activities are centered - and making demands for provision of municipal services.
The practice of pushing unfunded responsibilities and mandates from higher to lower levels of government isn't new. But the governor's proposal to end the business-license tax, without anything better to substitute for it, amounts to a couple of new twists on the old shift-and-shaft.
by CNB