Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, December 23, 1994 TAG: 9412230137
SECTION: VIRGINIA PAGE: B-3 EDITION: METRO
SOURCE: Associated Press
DATELINE: RICHMOND LENGTH: Medium
Gov. George Allen has called for elimination of the business and professional occupations license tax that businesses pay to localities. The state would replace the lost revenue for five years. After that, localities would have to absorb the loss.
``The choices will be either cut services to our local citizens or raise revenue from another source,'' said James Campbell, executive director of the Virginia Association of Counties. ``One of the few choices is certainly the local property tax.''
Campbell said a study released Thursday by the University of Virginia's Weldon Cooper Center for Public Service shows that localities are determined to operate efficiently.
The study says the median real estate tax rate for Virginia cities stayed the same this year while the rate for counties fell slightly. The median personal property tax on cars and trucks fell from the previous year for both cities and counties.
``Local governments are operating as lean machines now,'' Campbell said. ``They have responded to the citizens by trying to hold taxes to a minimum.''
UVa economist John Knapp, who conducted the study, said the real estate and personal property taxes are the only two major local taxes with no state restrictions on rates. He said if the gross receipts tax is abolished and localities are not given new taxing powers, property taxes will have to be raised or services cut.
Campbell said there is no fat left to cut.
``For the past five years, local governments have been streamlining - cutting back, doing more with less,'' he said. Without the gross receipts tax, he said, citizens could see ``some dramatic increases'' in property taxes.
But Betty Long, director of fiscal policy for the Virginia Municipal League, believes service cuts are more likely than tax increases. ``Local officials are just as loath to raise taxes as anybody else is,'' she said.
``The governor has said this can be done without raising taxes,'' said Allen spokeswoman Melissa Herring Dickie. She said streamlining state government is a major Allen objective, and ``he's asking local governments to do the same.''
She also said eliminating the gross receipts tax would spur economic development, which would mean more revenue from other tax sources.
Campbell said loss of the gross receipts tax would cost localities $300million a year. To illustrate the significance of that figure, he said closing all local and regional jails would save $175million.
According to Knapp's study, the 1994 median tax rate on real estate was $1.10 per $100 of assessed value for cities, 66 cents for counties. The city rate was unchanged from 1993; the county rate was a penny lower.
The rate rose in four cities and 25 counties and fell in three cities and 12 counties. It stayed the same in 34 cities and 58 counties.
Personal property tax rates for cities fell 5.7 percent, from $2.83 per $100 a year ago to $2.67. The median for counties dropped 1.3 percent, from $2.23 to $2.20.
by CNB