THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Tuesday, October 10, 1995 TAG: 9510100262
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY WARREN FISKE, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: Medium: 77 lines
Leaders of the Virginia Municipal League expressed skepticism on Monday about Gov. George F. Allen's plan to give all lottery profits to local governments.
``I hate to look a gift horse in the mouth,'' said Virginia Beach Mayor Meyera E. Oberndorf, who will become president of the league today. ``But it's better to do that than be taken in by a Trojan horse.''
Allen wants to give Virginia's $300 million a year in lottery profits to localities for use in schools, public safety or reducing real estate taxes. The money now goes into the state's general budget fund. His proposal has become a rallying cry for Republicans in this fall's legislative campaigns.
During a speech Monday before the league - a statewide lobbying organization for cities - Allen lauded his plan as a way to decentralize state government and increase the power of local governments to control spending decisions. The governor criticized Democrats for insisting that lottery revenues remain under state control.
``Some have said we can't trust the localities to make wise spending decisions,'' he said. ``I think this is downright insulting, it's elitist and it's distrustful of the people.''
But local government leaders said they need more information before judging Allen's proposal. Noting that the program would put a $300 million hole in the state budget, they voiced concern that Republicans might pay for the proposal by rescinding other forms of local aid. ``The lottery goes to the general fund, and 50 percent of the general fund is already being returned to localities,'' said C. Flip Hicks, general counsel for the Virginia Association of Counties. ``We want to make sure that one hand isn't giving us something while the other hand is taking it away.''
Allen sought to reassure the local leaders by saying the state could make up the lost revenues through business growth, which he predicted will add $350 million to Virginia's tax base next year. The governor has said he will not unveil the details of his lottery proposal until December, after he has reviewed year-end economic projections.
Several local government leaders voiced concern, however, that Republicans will renew their efforts next year to strip municipal governments of their power to impose a tax on gross business receipts. The so-called BPOL tax provides localities with $300 million a year.
Repeal of the gross receipts tax has been a top item on the agendas of many GOP candidates this fall, even though Allen has suggested that he may not lead the effort. Should Republicans succeed, the loss in revenues would wipe out the gain from the return of lottery funds.
During a separate speech before the Municipal League, House Majority Leader C. Richard Cranwell, D-Roanoke County, dismissed Allen's lottery plan as an election-year gimmick. He reminded the group that earlier this year Allen said localities needed to be ``weaned to wasteful spending habits'' when he unsuccessfully proposed to repeal the gross receipts tax without replacing the loss to municipal governments.
``If someone suggested you were wasteful spenders, why would they now suggest they want to put $300 million back in your wasteful coffers?'' Cranwell asked.
Cranwell said Democrats had a better plan for lottery money last winter when they passed legislation earmarking the profits for public education and lessening disparity between poor and rich school districts.
Allen called the plan a ``shell game.'' The Democrats, he said, kept lottery profits in the state's general fund, which already provided money for education, but did not increase the overall appropriation for public schools.
Michael Amyx, executive director of the Municipal League, said he has a ``healthy dose of skepticism'' about each party's lottery proposals. ILLUSTRATION: Color photo
Gov. George F. Allen
KEYWORDS: LOTTERY PROFITS LOTTERY EARNINGS by CNB