DATE: Thursday, March 20, 1997              TAG: 9703200340

SECTION: LOCAL                   PAGE: B5   EDITION: FINAL 

SOURCE: BY TERRI WILLIAMS 

        STAFF WRITER 

DATELINE: SUFFOLK                           LENGTH:   64 lines

SUFFOLK COUNCIL LOOKS AT TAX HIKE TO PAY FOR CAPITAL PROJECTS RESIDENTS ARGUE AGAINST AN INCREASE AND PLAN TO COLLECT TWO TIMES A YEAR.

Raise taxes by 3 cents now.

Or raise them later.

That's the dilemma the City Council is grappling with as this city of about 55,000 grows and demands more schools and city services. And for now, the City Council hasn't figured out the answer.

On Wednesday night, the council delayed action on a plan to collect real estate taxes on both June 5 and Dec. 5.

Council would like to weigh how much such a plan would cost.

Currently, the city collects real estate taxes in December. Council and city staffers contend that such a plan will allow the city to get an immediate cash flow to pay off existing debt and for capital projects, such as schools.

The other option is a 3-cent tax increase to pay for a new central elementary school and to pay off the remainder of the costs for the $14 million Mills E. Godwin Courts Complex, said city Finance Director M. Christine Ledford.

But collecting taxes twice a year has administrative costs too.

At the last council meeting, Commissioner of Revenue Thomas Hazlewood projected that it would cost his department an additional $100,000 to administer the semi-annual collection plan.

At Wednesday's meeting, City Treasurer Ronald H. Williams said his department would need an additional four staffers at a cost of about $80,000 to implement the program.

Nevertheless, city officials say it's worth the costs. They estimate that the interest earned on the money would generate an additional $11 million.

Yet the sentiment among citizens in the standing-room-only council chamber was against the measure. The residents argued that they didn't want the city using their hard-earned money as a quasi line of credit for the city's future needs. Farmers contended that paying their real estate taxes in the summer will create an undue financial hardship. Farmers earn the bulk of their income in the fall.

James A. Pendleton, a Sleepy Hole area farmer, said he can't afford to pay the taxes in June with all of his other tax responsibilities.

``There's not enough recovery time to pay you all on June 5,'' said Pendleton.

Former Suffolk Mayor Andrew B. Damiani said the semi-annual collection is only a patchwork solution to a problem that has bigger long-range ramifications.

``You are using it as a quick fix and a gimmick,'' Damiani told the council. ``You're doing this to avoid the real issue. There's a need for new fire stations and schools. These demands will continue. It's not going to go away.''

City officials are candid about their challenges. During a work session earlier in the day, City Manager Myles E. Standish apprised the council of the city's future demands.

Even though the semi-annual collection plan doesn't necessitate a tax increase, Standish said the city will need one in the next few years.

``There's going to have to be a tax increase to fund the capital projects that Suffolk deserves,'' said Standish. ``This is an evolving city, and people deserve amenities.''

Over the past 10 years, the city has issued $112 million in general obligation bonds for various projects including schools. There is $76 million outstanding, said officials. KEYWORDS: SUFFOLK CITY COUNCIL

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