DATE: Sunday, October 5, 1997               TAG: 9710030011

SECTION: COMMENTARY              PAGE: J4   EDITION: FINAL 

TYPE: Editorial

                                            LENGTH:  108 lines

PROMISES, PROMISES STATE EARNS CITIES' DISTRUST

When gubernatorial candidates tell localities, ``Trust me,'' city and county officials shudder and pray that they won't lose their shirts.

That's because the state's record for keeping promises to cities is imperfect, to say the least, even when the promises are written into law or contained in the state constitution.

The key political promise scaring mayors this year is from James S. Gilmore III, the Republican candidate for governor. He proposes phasing out the personal property tax on most cars. That tax is cities' second-largest source of revenue, after the real estate tax.

Gilmore promises that the state will reimburse the cities for every dollar they lose by not collecting the tax. That amount would be $1.4 billion a year, according to to the Virginia Municipal League, though Gilmore says the total would be half that.

Local elected officials fear that the state might reimburse localities for several years, while residents grew accustomed to not paying the tax, then end the reimbursement, leaving local governments in a lurch. To balance their budgets, local leaders would have to reimpose the car tax, but taxpayers would be outraged at them.

Democratic candidate Donald S. Beyer Jr.'s proposal to cut the car tax is less frightening to local leaders because localities would continue to collect the tax.

Under Beyer's plan, the state would reimburse money directly to the car owners in the form of a state income tax credit. If the state reneged on the deal later on, the localities would still have the tax money. And citizens would be angry at the state, not at cities and counties.

So what has to happen for the promised reimbursements to become reality? First of all, the next governor must persuade the General Assembly to end or reduce the car tax. Second, all subsequent governors and General Assemblies must agree to continue the reimbursement. But that's something the next governor cannot ensure, since subsequent leaders are not bound by his promises.

The truth is, state promises to localities often get broken, usually to save the state money.

Here are promises the state has broken, bent or attempted to break, plus a classic case of a state action that left a city holding the bag:

Police Block Grants, or House Bill 599. To watch a mayor turn red, mention those grants.

As part of a deal by which cities agreed not to annex their county neighbors, the state paid them $44.7 million in fiscal 1981 and wrote into law that the grant would increase each year at a rate equal to anticipated increases in the General Fund.

The law remains on the books, but the state kept its word on the increases only for two years. Ever since, increases have been been smaller than promised. In fact, General Assembly appropriations acts contain specific language to override the law. It's a little-known fact that Virginia appropriations acts can override any general law.

In the present fiscal year, cities will receive $66.9 million in Police Block Grants, which is $68.4 million less than they would have received if the state's word had been good. All told, since fiscal 1981, the state has paid cities $420 million less in Police Block Grants than it agreed to. In fiscal 1992, then-Gov. L. Douglas Wilder actually cut the annual grant by $13 million.

State support for Standards of Quality in public schools, kindergarten through high school. The 1971 Virginia Constitution states that the legislature will apportion the cost of maintaining Standards of Quality in public schools between the state and localities. That apportionment, under state law, is 55 percent from the state and 45 percent from the localities.

But here's the rub. The Standards of Quality, as defined by the legislature, are so low that Virginia localities, in an attempt to educate their students, pay about $1.5 billion more a year than their state-mandated share.

The result is that localities pay about 55 percent of the operating costs, while the state pays 45 percent. That's the reverse of what state law says.

The state constitution requires the state to ``seek to ensure that an educational program of high quality is established and continually maintained.'' But by having low Standards of Quality, the state can pay a smaller share of school operating costs. A promise contained in the Constitution to keep standards high has been seriously bent, if not broken, to the detriment of cities and their schools.

Comprehensive Services Act, which took effect in 1993. The state suggested to localities that they work with the state to care for at-risk children, including foster care children and children needing special aid. Pooling resources would save money, the state said. Under the Comprehensive Services Act, the state agreed to pay about 60 percent of costs, with localities paying the rest.

Costs of the program keep rising, largely because the number of at-risk children keeps rising. Also, keeping some of the children in special facilities costs more than $100,000 a year per child. Federal law mandates that these at-risk children receive care.

In 1996, Gov. George F. Allen attempted to freeze the dollars the state would pay, leaving localities to cover ever-increasing costs. The General Assembly blocked the governor, saying that it had agreed to the funding formula and was obligated to continue it. This year Governor Allen tried again to freeze the state contribution. Again he was blocked.

This is a case where an attempt to break a promise was blocked.

State removal of tolls leaves Virginia Beach in a financial bind. Sometimes the state doesn't specifically break a promise by its actions, but those actions still leave a locality holding the bag.

The state lifted the quarter toll on Route 44 in 1995 - to much self-congratulation.

The state ignored Virginia Beach City Council's pleas to retain the toll until $48 million in needed improvements were made. Now the improvements remain to be made, and there's no likelihood the state will pay for them.

If the state had left well-enough alone in Virginia Beach, continued tolls would have paid for the improvements.

You can see why state promises make mayors nervous.

If the law and the constitution cannot guarantee that state promises will be kept, there is no guarantee.

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