
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, July 11, 1990                   TAG: 9007110405
SECTION: EDITORIAL                    PAGE: A-6   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

WILL LOCALITIES GET THE SHIFT AND SHAFT?

LOCAL GOVERNMENTS in Virginia, which for years have pleaded with the General Assembly to relieve their fiscal stress, are now facing the prospect that their finances will get worse before they get better.

Gov. Douglas Wilder has warned that state aid to localities - which accounts for about a third of most local governments' budgets - likely won't be exempted from new rounds of state budget paring. Somehow a widening gap between revenues and expenditures of possibly $300 million or more must be closed.

While 90 percent of state aid to localities escaped the knife when revenue shortfalls forced state budget cuts earlier this year, Gov. Wilder is now saying that - except for an increase in state taxes - "everything is on the table."

Nearly 60 percent of state general fund revenue flows back to localities for schools, law enforcement, street and road maintenance, welfare programs and other critical community services.

Roanoke City Manager Bob Herbert, echoing the anxiety of masny local officials, says substantial reductions in those aid categories "would just knock the pins out from under us."

Almost certainly a major cut in state aid will mean that many local governments will have to raise local taxes. This will bring, with good reason, renewed pressure on the legislature to give cities, counties and towns new taxing options and authority. If such options and authority aren't granted, a sizable shift in the tax burden would be unfair.

Since real estate and personal property taxes are their main sources of revenue, some localities already have raised these beyond limits that taxpayers will tolerate - prompting tax revolts and a booting out of local officials. (Municipal elections in May produced an unusually high turnover of about 35 percent statewide - a result that Virginia Municipal League officials believe was tied to voters' unhappiness over local tax rates.)

Herbert calls it the "shift and shaft," and there's no way such cuts in state aid could be absorbed without pain. Some local governments will have to raise taxes and curtail services, in which case the public would get less while paying more - not a result easily explained to the citizenry.

Unquestionably, local governments have benefited from the state's robust financial health in recent years. During the good times, state aid for localities was substantially increased; this year it is expected to total $3.7 billion.

With the state now facing a difficult financial period, it may be only reasonable and fair that local governments share in the state's budget-cutting - provided that fat is trimmed from state agency spending first.

What's troubling, however, is that Wilder - highlighting himself as a potential candidate for national office - has tried mightily for political mileage as a fiscally conservative populist governor who can deal with Virginia's tough financial problems without raising taxes.

In his travels around the country, he's said that's the sort of wave from his "new mainstream" that could carry the Democrats to the White House. Naturally, he tweaks President Bush for breaking his no-tax-increase pledge.

But if Wilder's proposed management of the state's budget crunch is to cut aid to localities and force them to raise taxes - while avoiding the responsibility and blame for doing so himself - it is indeed a shift and shaft.

A tax increase is a tax increase, and the governor is being disingenuous to pretend that taxes won't be raised in Virginia.

by CNB