THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Sunday, January 19, 1997 TAG: 9701210457
SECTION: CHESAPEAKE CLIPPER PAGE: 06 EDITION: FINAL
TYPE: Cover story
SOURCE: By MAC DANIEL, STAFF WRITER
LENGTH: 137 lines
C HESAPEAKE officials and residents are faced with a budgetary dilemma as they begin to map out the next five years of capital improvements in this growing city.
This is nothing new. City budget officials have long said that the next five fiscal years are going to be tight as Chesapeake continues to meet the growing needs.
There has long been talk of some kind of ``revenue enhancement'' or tax increase to make up the difference, and it appears that time has come.
City budget officials are predicting that the city's coffers could be $14 million short. If the shortfall is not erased, a number of high-priority projects may not be built over the next two years.
City Manager John L. Pazour said last week that a thorough review of city revenues will be completed before the City Council asks citizens to pay for the shortfall. In addition, after the fiscal review, those shortfall figures could change. All agree, however, that things are tight.
The shortfall is not coming directly from the capital budget but from the city's operating budget.
In layman's terms, a city's capital budget affects the operating budget to a great degree. The projects listed in this latest capital budget include the city's debt service or the money the city pays on principal and interest on its debt. Once approved in the capital budget, the debt service and the operating costs of some of these capital projects are added to the operating budget.
In this case, once all the costs to operate the city are combined, the projected shortfall results.
All this comes despite a projected upturn in city growth. After a recent low of eight-tenths of a percent growth last year and a recent high of 4 percent growth in 1994, the city is estimating that the growth rate will increase to between 1 percent and 1.5 percent by the end of the year.
That could mean a 6 percent to 7 percent annual increase in city revenues, or roughly $15.5 million in new money next year. But according to city officials, that's still not enough.
``We've got expenses that exceed that by $5 million the first year and $9 million the second,'' said budget director Claude A. Wright.
To make up the difference, Wright's office has proposed several fee and tax increases that could generate about $6.8 million annually.
The full list includes:
Raising the fee for using emergency 911 service from 50 cents to $1.95. This could raise $1.3 million annually.
Raising the local cigarette tax from 20 cents per pack to 30 cents. This could raise $1.4 million annually.
Levying a 10 percent tax on the first $30 of a cellular phone bill. This could raise $348,000 annually.
Charging 10 percent on the first $15 of a cable television bill. This could raise $389,000 annually.
Raising the fee for emergency medical service (EMS). The current fees - $100 for basic life support and $150 for advanced life support - to $200 each. This could raise $700,000 annually.
Raising the tax on machinery and tools from $3.12 on 20 percent of assessed value to $4 on 40 percent of assessed value. This could raise $716,000 annually.
Raising motor vehicle license fees from $23 for vehicles under 4,000 pounds/$28 for those over 4,000 pounds to $26 and $31. This could raise $381,000 annually.
Raising the residential gas utility tax from 25 percent on the first $7.50 to 20 percent on the first $15. This could raise $472,000 annually.
Raising the commercial gasoline utility tax from 25 percent on the first $450 to 20 percent on the first $2,000. This could raise $717,000 annually.
Creating a $20 fee to apply for a building permit. This could raise $143,000 annually.
Raising electrical permit fees from $15 to $20. This could raise $78,000 annually.
Raising plumbing permit fees from $15 to $25. This could raise $28,000 annually.
The council has yet to make any decision on the proposed taxes or rate increases. At a work session last week, council didn't even discuss the possible tax or fee increase and instead talked about various projects that were or were not included in the budget.
As for the 1997-2001 proposed capital budget, city officials plan to spend more money on the city's capital needs in the next five years compared to the last cycle, but only by $4.3 million in city cash. The Public Works Department recently found a $1.1 million project surplus, which could be added to the $4.3 million.
The city proposes to borrow an additional $1.9 million in the last three years for non-school projects and an additional $1.4 million in the first two years for school projects.
But as happened last year, city officials propose to fund the school district's growing requests for only the first two years of the five-year budget cycle, citing worries about dashing Chesapeake's much-valued bond rating.
The city's bond rating is used to decide how much interest the city will pay on its ever-increasing debt. City officials say that, by not fully funding the school district's five-year request, they are responsibly managing the city's debt service and bond rating.
The school district's proposed budget is $87 million over the city manager's recommended amount.
The proposed capital budget includes:
Giving the Department of Economic Development a total of $3.2 million to develop new industrial parks - a 113 percent increase over last year.
Donald Z. Goldberg, director of economic development, has talked about creating a 5-cent per pack cigarette tax increase to help fund a business incentive program. No action has yet been taken on this proposal.
Funding a new Master Road Plan for the city at a cost of about $750,000. Officials said the current master road plan is obsolete.
Decreasing the amount of capital funds given to the Parks and Recreation Department. Under the currently capital budget, $2.1 million in funding for the Cooper's Ditch Trail and the Poplar Branch Trail would be deleted from the budget after grants for the projects fell through. The capital budget includes about $233,000 to develop four parks in the city (Wingfield Point, Cedarwood, Oakbrooke and Oak Grove Meadows) and $2.06 million to develop a 225-acre park south of Deep Creek. Parks and Recreation will experience a 48.3 percent funding decrease compared to last year's capital budget if approved as is.
Increasing funds for road and related projects by 56 percent. Money for the Battlefield Boulevard South project is proposed at $102 million. Another part of that same project is proposed at $22 million. The Oak Grove Connector will also get additional funding.
Adding $5.4 million to the proposed Circuit and General District Courts building to cover elements left out of the original design.
The capital budget must be approved by the City Council by the end of February. The first public hearing on the budget was held last Tuesday and the first in a series of public meetings on the capital budget was held last Thursday. At least one more public hearing is planned on the night the council approves the budget. That date remains unknown. ILLUSTRATION: Graphics
The Virginian-Pilot
UNFUNDED PROJECTS
SOURCE: City of Chesapeake
CAPITAL BUDGET
SOURCE: City of Chesapeake
PUBLIC MEETINGS
[For complete graphics, please see microfilm]