ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Tuesday, April 8, 1997 TAG: 9704080078
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: DAN CASEY THE ROANOKE TIMES
Roanoke's vice mayor calls the plan to cut real estate taxes by 1 ``penny-wise and pound-foolish.''
A real estate tax rate cut appears likely in Roanoke next year. But to homeowners the potential saving - if it can be called that - would barely buy a cheap lunch.
Most homeowners won't save even that much, however, because the value of their houses has gone up.
City Council on Monday ordered City Manager Bob Herbert to prepare a fiscal 1998 budget assuming a 1-cent cut in the real estate rate beginning Jan. 1, 1998. At the same time, council sent a strong signal that it won't raise any consumer taxes in the immediate future.
The real estate reduction would lower the rate from the current $1.23 per $100 of assessed value to $1.22 per $100 - a drop of about eight-tenths of 1 percent.
But the cut will be more than wiped out by rising real estate assessments, which increased an average of 3.1 percent this year. Nearly all homeowners would pay more in real estate taxes next year than they paid this year.
Monday's action came after two months of tax-reduction talk, spurred by reassessments this year. But the proposed cut is far smaller than council members had talked about earlier. Some wanted to see up to 10 cents come off the property tax rate over the next five years.
The rate-cut proposal came from Councilman William White and passed 6-1. A final vote on the rate won't occur until mid-May, after a May 5 public hearing at the Roanoke Civic Center. There, council will entertain pros and cons from the public about the tax rate reduction.
If Monday's meeting was any indication, that debate could be fractious.
Vice Mayor Linda Wyatt, the only member to vote against White's proposal, called it ``irresponsible'' and ``penny-wise and pound-foolish.''
``We are sitting here in this city with a long, long, long list of capital improvement needs,'' Wyatt said. ``To be irresponsible enough to lower the tax rate when we can't fund the projects we have now, is, pardon the pun, penny-wise and pound-foolish.''
Cynthia Ries, a representative of the Central Council PTAs, predicted parents and teachers would turn out in force to lobby against the tax-rate cut at the public hearing. Retirees on fixed incomes, who favor a tax cut, probably will be there too.
White, an accountant, said his proposal came after a hard look at future city revenues and spending.
``My motion is not frivolous. It's not irresponsible,'' he said. ``My conclusion is to have a 1-cent reduction spread over two fiscal years so we can neutralize the decrease on the operating budget and not cut programs. I think it's achievable and it's something that we can hang our hats on.''
Through rising assessments and other revenue, the city expects to have about $5.2 million more in total revenue next year than it has this year. A 1-cent reduction pegged to Jan. 1 would mean about $177,000 less to city coffers.
Other council members agreed with White, noting that revenues are expected to total $160 million in fiscal 1998.
``We're really talking about less than one-third of 1 percent,'' Councilman Jim Trout said. ``This is getting down to the point of being ridiculous.''
Councilman Carroll Swain said four of every five voters he spoke to while campaigning last year mentioned a desire for a tax cut.
``They have lost trust in government. They have lost trust in City Hall,'' Swain said. ``This is a matter of regaining that trust.''
But Wyatt, a city schoolteacher, said the $177,000 could buy a lot of government services or building projects.
``I guess for you gentlemen, $177,000 is not a lot of money,'' she said. ``But on a teacher's salary it certainly is a lot of money. I want to know, for this $177,000, exactly what is going to be thrown away?''
``This is not throwing money away,'' Mayor David Bowers replied. ``This is money that we're not taking from our citizens. This is saving them money.''
The savings, however, are tiny. The average home value in the city is $67,500. With a 1-cent rate reduction halfway through the fiscal year, the owner of that home would pay $3.38 less to City Hall than he or she would without a rate cut. That's barely enough to buy an Extra Value Meal at McDonald's.
And because assessments rose an average 3.1 percent, the same homeowner's actual tax bill would still increase about $18, even with the lower rate.
After the vote, Ries noted that a 1-cent rate cut equates to $3.75 million less that the city could borrow for capital projects in its next bond issue.
In view of the needs, ``that's shortsighted,'' she said.
In other action Monday, council declined to schedule a public hearing for any possible tax increases. That means levies that were under consideration - such as a utility tax on cable TV or cellular phone service or an increase in the hotel room tax - couldn't go into effect on July 1, the beginning of the fiscal year.
Council still could raise those taxes at a later date, however. White said they are still on the table.
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