DATE: Wednesday, April 2, 1997              TAG: 9704020501

SECTION: LOCAL                   PAGE: B1   EDITION: FINAL 

SOURCE: BY KAREN WEINTRAUB, STAFF WRITER 

DATELINE: VIRGINIA BEACH                    LENGTH:  106 lines

AT BEACH, SCHOOL FUNDING POSES BIGGEST CONTROVERSY DRAINAGE PROJECTS, MORE POLICE AMONG REASONS FOR PROPOSED TAX HIKES.

The average taxpayer will be asked to pay $20 to $100 more next year to meet the growing demands of the state's most populous city and second-largest school system.

The city staff released its proposed 1997-98 budget Tuesday, asking the council to raise utility and storm water taxes and warning of a real estate tax increase if more money is provided to schools.

The council could choose not to ask for a storm water tax increase, budget director E. Dean Block said. But that would mean many long-needed drainage projects, including work on the North End, would have to be deferred again.

The question of how much to fund the school system is expected to be the biggest source of controversy during the six-week budget deliberation process.

School officials, who want $13 million more than the city is suggesting, have already accused council members of ignoring the needs of children. Council members have said they want to give more to schools, but also have to fund police, libraries, parks and other city functions.

The proposed $957 million operating budget - $50 million more than this year's - adds 15 new police officers and meets the growing demands of the city's justice system, children's dentistry, recycling and other programs in addition to schools.

The budget provides half the increase the School Board asked for in its proposed 1997-98 budget. Funding the extra $13.2 million would add 7 cents to the city's tax rate, and cost the owner of a $100,000 home about $70 next year. Homeowners' real estate tax bills will also rise or fall with changes in the assessed value of their land.

``We cannot meet the school division's needs as they have defined them with current revenue,'' Block said. ``It's simply a matter of arithmetic.''

The school district has asked for $26 million more from the city for next year. But the city's growth rate would provide for $23 million more in taxes next year without a rate increase, Block said.

That means the city would have to eliminate all other new spending for next year and cut its current budget by $3 million just to meet the district's request.

The council passed a resolution Tuesday informing the district that it could not make such cuts and putting the School Board on notice that if it wants the extra dollars it will have to take responsibility for a tax increase to generate them.

The council asked the board to hold a public hearing and decide whether to request a tax increase by April 22. The council, which funds about 45 percent of the district's budget, makes the final decision on any new taxes.

Block also gave the council his recommended capital, or long-term, spending plan Tuesday - the smallest the city has proposed since the recession of 1991. It calls for a ``pause'' in city spending on some big-ticket items, such as a $5 million plan to extend the resort strip boardwalk inland under the Rudee Inlet Bridge.

The proposed six-year capital budget would also defer for one year the completion of a new high school on Princess Anne Road across from Tidewater Community College and would postpone reconstruction of the district's eight oldest schools until voters can consider the projects in November 1998.

In his annual message at the beginning of the budget, City Manager James K. Spore said he understands the district will be upset about the proposed spending plan.

``We have done the best that can be done under the circumstances,'' Spore wrote.

The city cannot afford to take on debt for new projects right now without creating the need for significant tax increases to repay bonds and staff new facilities, Block said.

But the austerity is only temporary, Block said, explaining that the city might be able to afford to borrow more once the Lake Gaston pipeline is completed - as soon as next spring - and the city's water worries are over. Then, growth will likely boost the city's bottom line and rating agencies may decrease the Beach's cost of borrowing.

The council is also considering a second public referendum this November to ask voters to approve new taxes to expand the city's public libraries. The cost of the expansion plans, which the council is expected to discuss April 29, has not been finalized.

Block said he recommended an increase in the tax on phone, electric, water and gas bills to pay for $3.9 million in new city needs.

Typical residents would see their utility bills rise by $1.80 to $2.40 a month, for a total of $21.60 to $28.80 per year. Instead of paying a 20 percent tax on the first $12 of monthly utility fees, residents would pay 20 percent of the first $15, as allowed under state law.

That increase would allow the city to hire 15 new police officers and 8 new dispatchers. The extra money would also pay for rising juvenile detention and city jail costs and the replacement of the Social Services building on Virginia Beach Boulevard, Block said.

Most city employees would receive 4.5 percent pay increases, under Block's proposed budget.

The 4-year-old stormwater fee would rise by 48 cents next year and 41 cents the year after, increasing residential bills from $2.74 to $3.63 over two years, Block said. Businesses pay the fee according to how much of their land is paved or roofed, which means they would shoulder more of the tax increase than homeowners, he said.

Four years ago, when the council instituted the stormwater management fee, it set the tax below what was needed to address all of the city's drainage needs, Block said, and promised not to raise the rate for at least three years. If the council chooses not to raise rates now, he said, it would add to the backlog of projects.

Virginia Beach's real estate tax rate is now $1.22 per $100 of assessed valuation. The council raised the rate by 3.2 cents last year. ILLUSTRATION: BEACH OPERATING BUDGET, 1997-98

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GRAPHIC

[For a copy of the graphic, see microfilm for this date.] KEYWORDS: VIRGINIA BEACH SCHOOL BOARD BUDGET VIRGINIA BEACH

CITY COUNCIL

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