THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Friday, January 31, 1997 TAG: 9701310574
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: 60 lines
Gov. George F. Allen said he opposes an effort by port cities in Hampton Roads to get a state study of taxes ``lost'' by the presence of state-owned cargo terminals.
``This is just something that will clearly harm our ports,'' Allen said in a radio interview. ``Our ports are important to Virginia.''
Norfolk, Portsmouth and Newport News persuaded a bipartisan group of local state legislators to introduce a resolution asking for a review of whether the state compensates the port cities enough to make up for taxes lost because the port terminals are state-owned.
The review would be conducted by the General Assembly's independent watchdog agency, the Joint Legislative Audit and Review Commission.
Norfolk loses an estimated $2.4 million in property taxes that would otherwise be collected if the land on which Norfolk International Terminals sits were privately owned, according to a 1995 study conducted for Norfolk by economists at Old Dominion University.
Partly offsetting that loss, the state pays the city about $135,000 in service charges for the 800-acre terminal on Hampton Boulevard, said Bob Fischbach, Norfolk's government programs director.
Meanwhile, 29 percent of those who hold jobs created by the port reside in Norfolk and the city gets 30 percent of the $35 million in taxes generated by port employment, the ODU study said. However, the largest number of port workers live in Virginia Beach, which has no port facility, and that city enjoys more of the taxes from port employment.
Allen joins state transportation and port officials voicing concern about the proposed study.
If it's passed, they say, the financial markets will take it into consideration when the Virginia Port Authority sells $70 million of bonds in the spring to finance expansion of the Norfolk terminal.
It could mean higher interest rates, if the market concludes there's a possibility the port might have to make up the lost property taxes to the cities someday.
``It harms our financial ability to expand the ports and make them more viable,'' which creates jobs and generates additional taxes, Allen said.
The state's commitment to and the port's ability to expand have helped attract and retain several shipping lines in the past few years, Allen said.
Norfolk's Fischbach said the city doesn't want any money from the port authority, calling it an issue between the localities and state government as a whole.
``We've simply asked the professional arm of the legislature to study how the cities are compensated,'' Fischbach said. ``Maybe the formula is fine the way it is or maybe it should change.''
State and port officials fear, however, that the burden could be passed to the ports. Just last year, the state cut $13 million of funding it had been providing the port authority, freeing it from direct state support. The port makes up that money from operations.
``Our numbers are very, very tight,'' said Joseph A. Dorto, chief executive of Virginia International Terminals Inc., which operates the state-owned terminals.
Any added costs would have to be passed to shippers, which could cost the port business by narrowing the price gap between Hampton Roads and more expensive ports to the Northeast, Dorto said.