THE VIRGINIAN-PILOT 
              Copyright (c) 1995, Landmark Communications, Inc.

DATE: Thursday, January 5, 1995              TAG: 9412310116
SECTION: NORFOLK COMPASS          PAGE: 05   EDITION: FINAL 
SOURCE: BY ALEX MARSHALL, STAFF WRITER 
                                             LENGTH: Medium:   57 lines

STATE'S TAX CUT MAY BECOME CITY'S TAX INCREASE

The City Council warned its residents on Dec. 27 that their real estate taxes could go up sharply if Gov. George Allen's proposal to cut business license fees goes through.

Allen has proposed cutting a variety of license fees now charged to businesses as part of his plan to sharply reduce taxes and spending.

These fees go under the heading Business Professional and Occupational Licenses, or BPOL revenues. Most businesses have to pay them to the city annually based on their gross revenues.

Norfolk takes in $13 million annually with these fees, the city says. If the license fees are removed, the council would have to raise real estate taxes 19 cents to make up the difference. That's $190 a year on $100,000 home. It would mean raising the real estate tax rate from $1.38 to $1.57 per $100.

Councilman Herbert Collins said the governor's proposal fit into a pattern of the Republican administration sharply cutting spending and tax revenues that tended to benefit urban cities like Norfolk.

``It would put such a strain on our cities, the loss of income,'' Collins said. ``I don't how we are going to make up for what the state is going to try to take from us.''

Norfolk is a traditionally Democratic city.

A small business owner himself, Collins said he did not like paying the professional license fees but was accustomed to them. Collins owns a small grocery store. The license costs him about $500 a year, he said.

Norfolk isn't the only city that would lose money. The city estimates that Virginia Beach would lose $19 million, Chesapeake $10 million, Portsmouth $4 million and Suffolk $1.5 million.

Council members emphasized that Norfolk was hardly a prolific spender. In the last half-decade, under City Manager James B. Oliver, the city has cut the size of its government by several hundred employees.

If Allen was looking for a model of efficient government, council members said he should look to Norfolk. ILLUSTRATION: Graphic

WHAT THEY'D LOSE

If business license fees are cut, this is an estimate of what South

Hampton Roads cities would lose in revenue:

Virginia Beach $19 million

Norfolk $13 million

Chesapeake $10 million

Portsmouth $4 million

Suffolk $1.5 million

KEYWORDS: NORFOLK CITY COUNCIL REAL ESTATE TAXES INCREASE PROPOSED

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