THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Wednesday, November 9, 1994 TAG: 9411090292
SECTION: LOCAL PAGE: B3 EDITION: FINAL
SOURCE: BY KAREN WEINTRAUB, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: Medium: 66 lines
For the first time in several years, the city isn't squeezed for money, but it may be again as early as next fiscal year.
The director of the Department of Management and Budget told the City Council on Tuesday that he's more optimistic than he's been in years. Still, the city will face shortfalls if certain trouble spots are not addressed, E. Dean Block said in presenting his five-year economic forecast.
The city's growth in revenues will begin to decline in the 1995-96 fiscal year, Block said, leading to a shortfall of $4.2 million in 1996-97 and $18 million by the year 2000.
The city's fiscal year begins on July 1 and ends June 30.
``Generally speaking this report is very positive,'' Block said. ``We're not looking down the barrel of a gun here as long as we can sustain Lake Gaston and Oceana (Naval Air Station) and some of the other initiatives we have going on.''
The recession of the past two years is over, but so are the years of boundless growth and ever-increasing tax revenues, Block said. The city must now face the problems of other aging cities: deteriorating housing stock, declining property values and increased demand for services.
The growing demand for new schools is one of the most powerful factors driving costs upward, he said. New construction for the school system will help drain the city's coffers by the end of the next fiscal year, Block said.
The 5.2-cent tax increase for schools, included in this year's capital improvement budget and scheduled to take effect July 1, 1995, will not offset that deficit, Block said. The council will have to decide how to address that budget shortfall.
Conflict between the school and city administrations over spending priorities has been an annual event. Block has often led the charge in asking the school system to do more with less.
Mayor Meyera E. Oberndorf said she, the vice mayor and the city manager have been working with the school district to improve relations this year.
Councilwoman Louisa M. Strayhorn, a former School Board member, said she sees the need for more services to ``keep up the quality of life'' in Virginia Beach. Councilman John D. Moss countered that residents' quality of life will decrease if the city takes any more money from them.
The budget problems may evaporate, Block said, if the student population does not grow as quickly as projected - 1.6 percent a year - or if his revenue projections are too conservative.
Block's assessment assumed that the Lake Gaston pipeline would be transporting drinking water to the Beach by 1998 and that Oceana Naval Air Station would remain open for at least five more years. If either prediction does not come true, Block said he will have to refigure his forecast.
If the pipeline doesn't open on schedule, the report predicts that the city ``will continue to experience economic and developmental impacts.'' If Oceana is closed, the tax base will be drained by the mass exodus of those now employed at the air station.
Block said he also assumed modest pay raises for city employees.
Overall, Block said he is more optimistic than he has been in years. ``The city has come through this recession very nicely, thank you,'' Block said. ``We downsized city government and did all the right things. One of the reasons we are in a reasonably good position to take advantage of the rebound in the economy is because they previously worked very hard in council to control costs.'' by CNB