DATE: Monday, June 9, 1997                  TAG: 9706040004

SECTION: LOCAL                   PAGE: B10  EDITION: FINAL 

TYPE: Editorial 

                                            LENGTH:   75 lines

TAX-EXEMPT TERMINALS MAYORS PLEAD FOR AID

The three Hampton Roads marine cargo terminals owned and overseen by the Virginia Port Authority are a megamillion-dollar annual boon to Virginia's economy. Unfortunately, their effect on the balance sheets of local governments is less positive. Reform is needed.

Economic activity linked to the port generates 120,000 jobs statewide. Local governments are able to tax private terminals' real estate, but VPA real estate is tax-exempt.

That matters because 47 percent of the value of all real estate within Norfolk is tax-exempt - federal, state, municipal and religious and other not-for-profits' property, including the VPA's Norfolk International Terminals.

Fifty-three percent of real estate value in Portsmouth is tax-exempt, including Portsmouth Marine Terminal.

Newport News fares better: 14 percent of its real estate is tax-exempt.

VPA's quasi-public status denies tax revenue from highly valuable waterfront industrial property to the three Hampton Roads cities that host VPA terminals: Newport News, Norfolk and Portsmouth.

The cities' three mayors - Joe Frank of Newport News Paul D. Fraim of Norfolk, James W. Holley III of Portsmouth - want the commonwealth to compensate their municipalities for revenue the cities can't collect because the VPA's terminals are not in private hands.

Last Thursday, the mayors asked a couple hundred members of the Hampton Roads Maritime Association to lobby their state legislators to work for a change in state law that would mandate state payments in lieu of taxes to their cities for VPA property within their boundaries. The maritime community should answer the call.

State government should pay, the mayors say, because Virginia as a whole benefits handsomely from the terminals. We agree. The cities in which the VPA's marine terminals operate incur costs they can't recoup.

Demand for municipal services climbs relentlessly. But localities' taxing options - that is, options for self-help - are severely limited by state law. Localities function in fiscal straitjackets.

Virginia localities are prohibited from imposing a payroll tax on those who work within their boundaries. Thus, localities rely heavily - too heavily - on the real estate tax and the personal property tax.

The mayors' wish for state payments to their cities to compensate them for taxes on VPA property that their cities are unable to collect is a reasonable one. Equity argues for the payments.

The mayors are not asking that the VPA, which is in rough-and-tumble competition for general-cargo business against other East Coast ports, cough up; they want the state to do so.

There is precedent: The commonwealth compensates localities for real estate taxes lost because of tax-exempt state property in their midst. Richmond, of course, is the big winner - state government pays it $2.5 million a year.

Newport News Marine Terminal, Norfolk International Terminals and Portsmouth Marine Terminal are publicly owned - but the VPA, not the state, holds title.

Yes, the VPA pays modest sums to the cities for fire protection. And yes, the terminals' activity spins off tax revenue for the cities. Norfolk calculates that $10 million in municipal revenue is attributable to terminal operations within the city, with a third of that coming from the VPA.

But there are also municipal costs associated with the terminals. Fraim said funding is urgently needed for construction of transportation infrastructure - a third Hampton Roads crossing and grade separations where roads and trains intersect. More transportation money is needed from the state to meet the infrastructure challenge.

Truck traffic to and from Norfolk International Terminals is projected to double by the year 2010 from the current 800-a-day average to 1,600. The Downtown and Midtown tunnels between Norfolk and Portsmouth and the Hampton Roads Bridge-Tunnel between Norfolk and Hampton clog often.

Southeastern Virginia's economic health is threatened by the congestion of these arteries during rush hours and holiday weekends.

The three mayors' case for money from the commonwealth for services and transportation infrastructure is airtight. All who care about Hampton Roads should echo the mayors' call.

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