Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, December 16, 1994 TAG: 9412160041
SECTION: VIRGINIA PAGE: B-1 EDITION: METRO
SOURCE: DWAYNE YANCEY STAFF WRITER
DATELINE: LENGTH: Medium
Roanoke Valley legislators on Thursday gingerly broached the subject one of them called "the next logical question" in Gov. George Allen's plan to eliminate the business-license tax:
Should local governments be given broader taxing authority so they can make up the revenue they'll lose under Allen's proposal?
None of the five legislators present at a business leaders' breakfast meeting was willing to endorse such a move - yet.
However, the willingness of even Republicans to raise the question may be a sign that the debate over Allen's plan will trigger a tussle in the 1995 General Assembly session over the powers of local government.
Historically, efforts to grant Virginia localities more leeway in the types of taxes they can levy have encountered stiff opposition - both from those who would be taxed and from state legislators who fear creating a mishmash of various taxes across the state.
State Sen. Brandon Bell, R-Roanoke County, is suggesting that, before the General Assembly grants more taxing powers to local governments, it first should ask localities to prove they are "efficient" - much the way the state is requiring colleges to "restructure" before they can qualify for additional funding.
However, all the legislators who met Thursday with the Roanoke Regional Chamber of Commerce and the Salem-Roanoke County Chamber of Commerce agreed that Allen's proposal to phase out the business-license tax inevitably will lead to discussion of whether to give local governments the power to enact other kinds of taxes.
"It's the next logical question," said state Sen. Malfourd "Bo" Trumbo, R-Fincastle. "All things must be considered."
His analysis was echoed, with varying degrees of enthusiasm, by the other legislators who appeared at the chambers' joint breakfast - Bell, Del. Clifton "Chip" Woodrum, D-Roanoke; Del. Vic Thomas, D-Roanoke, and Del. Morgan Griffith, R-Salem.
The Roanoke Valley's other legislator, House Majority Leader Richard Cranwell of Roanoke County, was absent. But he made his views on Allen's tax plan known Monday, when he blasted it as the "most ill-conceived" tax cut he'd ever heard of.
Woodrum, who joined in Cranwell's broadside Monday, continued Thursday to raise sharp questions about Allen's proposal.
The business-license tax garners $8.1million each year for Roanoke. If that revenue were eliminated, "what that means in the city is an increase of 28 cents in the real estate tax. I don't like that tax, either," Woodrum said. "What authority do you want to give localities to raise revenue? That question has got to be answered."
His legislative colleagues were more muted in their tone, but raised essentially the same points. "There's no question this is an unfair tax," Griffith said of the business-license tax, because it taxes gross receipts, not profits. That means some businesses are taxed even if they lose money.
"Where the governor and I might part company is what we might do for the localities," Griffith said.
Allen proposes to pay subsidies to local governments to make up the difference as the tax is phased out over five years. But after that, the governor is betting that businesses, freed from the "burden" of the license tax, will create enough new jobs to compensate for the lost tax revenues.
Interestingly, all three Republicans - Bell, Trumbo and Griffith - said they haven't made up their minds on the tax plan, an indication of the pressures they're coming under. On the one hand, they'd like to support a GOP governor who wants to slash a tax he says is "despised" by business. Yet, local governments in their districts are starting to voice concerns about how they'll pay for services when the revenue is phased out.
Just this week, the governing bodies in Roanoke County and Salem, both localities represented in Richmond by Republicans, publicly expressed their financial fears.
If Cranwell and Woodrum are the most outspoken against Allen's plan, the most supportive legislator appears to be Bell.
He, too, says he wants to wait until he sees Allen's full budget proposal, to be released Monday.
Bell also suggested the emphasis on how the tax cuts would affect local governments misses a key point. "It's not the government's money, it's the people's money to begin with," he said.
He said the legislature should examine more closely than it has in the past what kind of new taxes localities want to impose - and why.
Bell said that, as first the federal government and then the state government have cut back on programs, the greatest growth has been in local government. That's why, he said, "I think local governments are going to get more and more scrutiny. We'll have to ask them how can we help you to be more efficient, not just send them more money ... I know a lot of legislators would be receptive to that."
by CNB