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

DATE: THURSDAY, July 28, 1994                   TAG: 9407280067
SECTION: EDITORIAL                    PAGE: A15   EDITION: METRO 
SOURCE: Ray L. Garland
DATELINE:                                 LENGTH: Long

FINDING NEW FRIENDS - AND DOLLARS - FOR OLD CITIES

The state Commission on Local Government issues an annual report on the fiscal health of Virginia's 136 cities and counties. It factors property values, retail sales, personal income and other data to measure a locality's ability to provide its current level of services within the context of its tax base. Many of the state's cities are found among the top 20 most-stressed localities.

When the cities were rich, relatively free to annex and possessing a far larger share of seats in the General Assembly than now, they did not aggressively challenge policies favoring counties over cities when it came to handing out state aid. When the legislative reapportionment of 1971 began the real shift of political power to the suburbs, the larger cities lost their historic right to expand through periodic annexation. The reapportionments of 1981 and 1991 merely locked the door and threw away the key. City legislators now hold fewer than 30 percent of assembly seats.

But now comes the Partnership for Urban Virginia proposing to do something to redress the situation. This is a coalition of the Virginia Chamber of Commerce and 12 urban communities. Between the cities (Arlington County is also a member) and the business community, it hopes to raise $350,000 to put together a legislative program for the 1996 assembly. As one businessman put it, "You can't have sick cities and a healthy commonwealth."

Fiscal stress suggests the need for higher taxes. Or, at least, a substantial increase in state aid. But the cities are already imposing higher local taxes than adjacent suburban counties, and extracting that from a smaller personal-income base. Nor is the prospect of any sizable increase in state aid very realistic.

The state is facing substantially higher costs for prisons, and the recent special session of the General Assembly earmarked large sums to satisfy the claims of federal retirees and to expand tax breaks for senior citizens. There is virtually no scenario under which Gov. George Allen would sign a bill raising the state sales or income tax.

In the private sector, those facing financial collapse generally realize that the quickest route to salvation is through controlling costs rather than increasing market share. The Urban Partnership can perform a useful service by stressing this point, particularly as it relates to such local budget-busters as employee health and retirement benefits. Private companies are beginning to see significant savings in health premiums by offering bonuses for those using the system least, and by contracting with providers for basic care.

But there are some revenue measures other than a local income tax or large increase in state aid through general tax increases that should be examined. We now have a hodgepodge of local taxes on cigarettes, prepared meals and hotel bills. The cities are empowered by charter to levy such taxes while the counties generally have a hard time winning approval for same. Reasonable, uniform taxes on these items, collected by the state and remitted to the localities on the basis of population, would be helpful to both cities and counties in several ways.

First, their uniformity would eliminate any competitive disadvantage from which one locality might suffer by imposing a higher tax than its neighbor. Second, state collection through existing channels would save local administrative costs and might assure better compliance. Third, significant additional revenue could be raised for all cities and counties without causing a great uproar.

Allen may or may not agree to an increase in the state gasoline tax before leaving office. But the next increase in fuel taxes should contain a local component, to be spent at the discretion of both cities and counties. This money could be used when state road projects require local matching funds, or for projects where no state funds are available. Every city and county has a list of roads badly in need of upgrading, for which state funding isn't even in sight. This is particularly true of secondary roads in rural counties, so there might be the possibility of some coalition-building.

There is a ray of hope for those cities below 50,000 population in the recent decision of the state Supreme Court in the case of the city of South Boston vs. Halifax County. In 1992, a three-judge panel ruled that South Boston could revert to town status, subject to two conditions: It would be forbidden to annex for 15 years and must charge citizens of Halifax County the same rate for water and sewer service as charged within South Boston.

The Supreme Court invalidated both conditions. Thus, South Boston will be free to enjoy the traditional prerogatives of towns in Virginia. That is, being both integral to the counties in which they are located and relatively free to incorporate more territory from that county. The Urban Partnership can be helpful in seeking to protect the court's decision as it might apply in the future to cities reverting to town status.

The business leaders in the partnership well understand that the way to gain the attention of lawmakers for issues not enjoying broad public support is through campaign contributions. While local-government funds couldn't be used for this purpose, the partnership should consider establishing a political-action committee to raise and disburse funds in pursuit of its goals.

Assuming it can take city legislators more or less for granted, and must write off those representing the most stubbornly suburban counties, they might begin by identifying the 40 or so districts where the judicious application of campaign cash will gain the most allies.

Ray L. Garland is a Roanoke Times & World-News columnist.