ROANOKE TIMES
Copyright (c) 1995, Roanoke Times
DATE: Tuesday, December 12, 1995 TAG: 9512120070
SECTION: VIRGINIA PAGE: C-1 EDITION: METRO
SOURCE: DAN CASEY STAFF WRITER
Thanks to steeply declining federal subsidies for mass transportation, the price of gasoline may be going up in Roanoke next year.
Without comment, Roanoke City Council on Monday asked the General Assembly for permission to impose a 2 percent gasoline tax to fund Valley Metro next year.
The move would force drivers who don't use buses to subsidize them. Property owners are footing the bills now.
If approved by the General Assembly, the tax would replace the bus service's federal subsidies, which began drying up this year. It also would replace a city appropriation for Valley Metro that has more than doubled since 1992, to $671,000 this year.
The city wants to create a transportation district and levy the tax within it. But its boundaries may not be limited to the city.
The 7-0 vote by council is the first step in solving a problem that has vexed city officials for almost a year, when they first received word that Congress was slashing subsidies for mass transit systems.
The federal payment declined by $190,000 this year, and city taxpayers were forced to make up the difference out of general fund revenues derived largely from property taxes.
Congress has scheduled another $191,000 cut in the subsidy for next year, and all federal subsidies may be eliminated by 1999.
Still unresolved is whether Roanoke County or Salem will participate in the transportation district.
The county Board of Supervisors last month voted to continue negotiations with the city.
Salem City Council took no action Monday night but raised some concerns about the value to its taxpayers.
Councilman Alex Brown questioned whether it would be beneficial for Salem to agree to the gas tax when it spends only $35,000 per year for its contract with Valley Metro.
"It's a lot more economical for us to donate an extra $35,000," Brown said.
The tax in Roanoke alone would generate about $1.4 million, which is roughly equivalent to the combined city and federal subsidies for the bus system.
If Salem and the county join in, the tax would produce about $2.5 million annually, providing enough revenue to expand the bus service in those areas.
The chief sticking point with the county is whether it could keep the gas tax revenues raised there and spend them on county projects rather than expanded bus service. County supervisors last month seemed adamant that any revenue raised there not go toward subsidizing Roanoke riders.
The resolution approved by council requested a 2 percent gas tax for any transportation district that may be formed in the future by valley governments.
If the county and Salem opt out, Roanoke would attempt to create its own district, City Manager Bob Herbert said in a report he submitted to council.
If nothing is done, city taxpayers likely would be forced to pick up all the federal subsidy, unless bus operations were drastically scaled back. The quasi-private company now serves slightly more than 5,000 riders a day.
Under Herbert's plan:
The city - and perhaps Salem and Roanoke County - would levy a 2-cent tax for every $1 spent on gasoline by drivers. Herbert estimated that the tax would cost car and truck owners who buy their gas in Roanoke $11 a year, on average. About 69 percent of that revenue would come from city residents.
At the same time, state law would require the city to reduce property taxes by an amount equal to the annual general fund payment to Valley Metro. This likely would mean a 3-cent reduction in the real estate tax rate, which currently is $1.23 per $100 of assessed value.
In his report to council, Herbert estimated the reduction would translate into savings of $15 per year for a property owner whose home is valued at $50,000.
But the savings probably would be eaten up by rising assessments, which are expected to increase 3 percent on average next year, said Will Claytor, director of Real Estate Valuation.
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