THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, January 31, 1996 TAG: 9601310386
SECTION: LOCAL PAGE: B5 EDITION: FINAL
SOURCE: BY MAC DANIEL, STAFF WRITER
DATELINE: CHESAPEAKE LENGTH: Medium: 63 lines
As Virginia's fastest growing city begins reviewing its proposed five-year building budget, it faces some problems.
Revenues are lower than expected, thanks to a slowdown in development. The city was projecting a 3.6 percent population increase in 1995, but saw only a 2.3 percent increase, meaning less tax money in city coffers.
At the same time, the city's debt has increased, thanks to a number of capital projects funded through bonds, including a citywide road bond referendum and major repairs to the city's Northwest River Water Treatment plant.
On top of this, the school district has included $48.2 million in their building budget request above what had been approved by the council.
City officials are not supporting the school budget increase. Even without it, the city will exceed a city council-approved debt limit of $2,400 borrowed for each resident by 1998.
If the school district's request was fully funded, the city said it would have to spend an estimated 15.8 percent of its general fund revenue just to meet interest payments. That would be a record percentage, according to budget director Claude A. Wright.
Tying up so much of its revenue in interest payments could jeopardize the city's bond rating, he said, which could compound the problem by forcing the city to pay higher interest rates when it borrows for capital projects.
Wright had warned school district officials he couldn't support their request.
``Without additional enhancements,'' Wright told School Board members on Jan. 9, ``I do not think we will be able to fund the request.''
Wright and council members have said that the city could approve the first two years of the school district's request and then reevaluate the situation in the third year. That might leave the $48.2 million in requested school projects in limbo.
The board is seeking the money to fund several major school building projects, including the purchase of land for Hickory Middle School.
The debt ceiling concerns were not raised Tuesday during a council work session on the capital budget. But the problems are expected to be debated on Feb. 10 when the council holds an all-day retreat to work on the proposed capital and operating budgets.
The only public hearing on the city's capital budget is scheduled for Feb. 27, the day council hopes to approve it. There is talk of adding another hearing prior to that date, according to acting City Manager Clarence V. Cuffee.
The capital budget totals $578,169,198, a 29.3 percent decrease from last year. Money earmarked to fund the expansion of Battlefield Boulevard has been taken out of the budget because the project goes beyond the budget's five-year time frame. That alone reduced the capital budget some 15 percent.
There are proposed decreases across the board. Money for community facilities has decreased 8 percent; money for parks and recreation has decreased 40.6 percent; transportation money has decreased about 34 percent; and school spending has decreased about 44 percent.
As expected, the budget proposes no new tax increases. And outside of bond funding for education and public utilities, no new borrowing is proposed. by CNB