ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Sunday, March 9, 1997 TAG: 9703100058
SECTION: VIRGINIA PAGE: B-1 EDITION: METRO
DATELINE: DAN CASEY THE ROANOKE TIMES
While asking for the forecasts, Roanoke City Council is also looking into taxing cellular phone use and cable television
Despite the grimmest revenue picture in several years, City Council on Saturday took another step toward cutting the real estate tax rate, ordering budget analysts to prepare revenue forecasts for 10-and 5-cent tax reductions spread over five years.
The 4-3 council vote in favor of the forecasts came over the objections of members who called it "nuts" and "ludicrous" for anybody to try to predict revenues and expenditures so far in advance.
At the same time, however, council members indicated a few tax increases or new taxes could be in the offing for next year. Among the possibilities mentioned were levies on cellular telephone service and cable television.
"Apparently, there have been some new taxes assessed in other jurisdictions that have not been assessed in the city of Roanoke," Mayor David Bowers said. "I think that's all part of the equation."
The discussions occurred during a budget and financial planning workshop Saturday morning at Roanoke Regional Airport.
Although Roanoke will have an additional $5.2 million to spend in fiscal 1998 if there is no change in any tax rate, the current revenue and spending picture for next year already shows the city nearly $2 million in the red.
That number assumes a possible 3 percent across-the-board raise for employees, which would cost $2 million, plus a handful of initiatives such as automating trash disposal, increased funding for curbs and sidewalks, and money for a greenway coordinator.
No formal recommendation on wage increases has been made. Raises have averaged 4 percent or more the past two years.
In part, the budget is being squeezed by additional expenditures over which the city has little control: social services, trash disposal, pension payments and employees' health insurance, City Manager Bob Herbert said.
"The bottom line is that anticipated revenue increases are not sufficient to cover priority expenditures," said Diane Akers, city budget administrator. "And the budget committee will be making some tough decisions on what to fund."
The picture is even bleaker on major capital improvements in the next 10 years. The city administration has identified 29 "high-priority" public works projects that would cost an estimated $159 million. But without increasing taxes, the city would be able to borrow only $37 million to fund those projects.
The news did little to stymie council's step toward a real estate tax cut, one that began in January.
A cut in the rate has been applauded by retirees on fixed incomes, who want some tax relief. But the proposal has been panned by school teachers and parents of school children, who fear it will curtail teachers' salary increases and capital improvement in schools.
Rather than actually cutting the rate or raising any other new taxes, council instead kept both possibilities alive.
Spearheading the move for the tax cut was Councilman Jim Trout. He asked the city administration to prepare budget and revenue estimates for a 10-cent cut spread over five years, and a 5-cent cut spread over the same period.
The real estate rate is $1.23 per $100 of assessed valuation. It was last cut in 1994.
Each penny cut from the real estate tax rate saves the owner of a $75,000 house $7.50 per year. Each penny cut reduces the city's total take from real estate taxes by about $345,000 annually.
"I feel very confident that we will have revenues to reduce the real estate tax rate in a satisfactory manner ... with no harm to the city manager's budget in any way," Trout said after the meeting.
Voting with Trout were Councilmen Carroll Swain and Nelson Harris and Mayor David Bowers.
Vice Mayor Linda Wyatt and Councilmen Jack Parrott and William White voted against Trout's motion.
"I think sitting here and talking about budgets and taxes five years down the road is nuts. ... The information we got today makes [a tax cut] less probable," Parrott complained.
Wyatt called five-year estimates ``ludicrous."
"All we're asking for is information," Harris replied. "We're not setting policy, only asking for information."
But the action worried Cynthia Ries, a South Roanoke resident who attended the budget planning workshop. She is forming a group called Parents for Capital Improvements in City Schools.
"I'm really concerned about reducing the real estate tax rate when our needs are so great," Ries said. "If we're living in a city with zero population growth, we've got to make our schools attractive enough to encourage wage earners and taxpayers to move into the city and stay here."
City Finance Director Jim Grisso led council through a list of potential tax increases, new taxes or other revenue enhancements. They include:
A 10 percent tax on the first $30 of cellular telephone bills, which would yield $240,000 annually. Roanoke County currently collects such a tax; the city does not levy one.
A 7 percent utility tax on cable television service, which would yield $910,000 annually. The city already collects a 5 percent franchise fee on cable television service, but the county collects the franchise fee plus a 5 percent utility tax. Nine other localities also collect this tax, Grisso said.
Eliminating a tax break for owners of agricultural land in the city, which would yield $102,000.
Eliminating a 3 percent commission paid to restaurants based on the amount of meals tax they remit to the city. This would increase revenues by $179,000 annually.
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