THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Monday, May 8, 1995 TAG: 9505080039
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY FRANCIE LATOUR, STAFF WRITER\
DATELINE: CHESAPEAKE LENGTH: Long : 107 lines
Can the fastest-growing city in Virginia afford a tax cut?
The City Council must decide the answer by Tuesday.
A 3 percent increase this year in overall property values promises to drive up the tax bills of many homes and businesses. Cutting the tax rate by 2 3/4 cents would offset that increase and keep the basic real estate tax at $1.27 per $100 of assessed value.
A tax-rate reduction for the second year in a row would cut homeowners a break. But City Manager James W. Rein believes cutting Chesapeake's property taxes could threaten the city's prosperity and ultimately damage its reputation as a good place to live.
``I'm not sure citizens will be willing to pay for the consequences of not raising the tax rate,'' Rein said.
``We have to keep pace with inflation on the expenses side. And the increases in assessments allows us to keep up with the inflation on the revenue side to go along with that.''
Inflation, Rein said, will drive up costs no matter what the council does to the tax rate.
City employees will need pay raises, more schools will need to be built, the public will want new programs. This is especially true in Chesapeake, where people have come to expect much more than the bare minimum, Rein said.
``That's why people are flocking here,'' Rein said, ``because we have great safety. We have the schools. That's what people see and that's our reputation.''
The lack of extra money coming into city coffers also would add to the burden of repaying debts on $150 million in bonds the city will take out this year for new schools, roads and other major infrastructure needs, he said.
The city last month approved $105 million in school bonds for school improvements, including two new schools - Thurgood Marshall Elementary School near Campostella Square and Hickory High School at the southern end of the city. Council members also approved $45 million in bonds the city was allowed to borrow under state law.
The city also must begin to pay back $25 million from a 1992 school-bond referendum.
After the city pays the interest on that debt, picks up the salaries of the people needed to staff those new facilities and meets basic day-to-day needs, Rein said he fears that almost no money will be left for raises or new programs.
In a work session last week, Rein presented council members with a list of programs they might want to cut in 1996 to accommodate his predicted cash crunch: municipal electric charges, a savings of $362,844; follow-up trash collection, a savings of $175,000; bulk trash collection, a savings of $345,455; a subsidy for the Great Bridge Baseball Association, a savings of $45,375; Sunday hours at public libraries, a savings of $94,115; community-based policing efforts, a savings of $936,181; and a new fire company, a savings of $399,590.
``That's where the council's decision is very difficult,'' he said Friday. ``Everything we do has a constituency attached to it.
``I believe the majority of people in Chesapeake want the schools, the roads and the safety,'' Rein continued. ``So you have to be willing to do what it takes.''
Council members now must strike a balance between what the city wants and what the city must have.
Instead of raising taxes, Councilman Dalton S. Edge wants to make the city more efficient.
``Government can't do everything,'' Edge said. ``I can't think of a single instance where government alone solved any one problem.''
Edge and other council members resisted the prospect of sacrifice when faced with the realities of cutting part of the city's community policing program or cutting fire trucks.
Edge acknowledged that those are precisely the kinds of judgments council members will have to make when they deliberate Tuesday night.
``I think there are valid reasons for all of the programs we have,'' Edge said, ``but often times we're presented with things that are so uncomfortable that we tend to give in. You have to strike the proper balance.''
Vice Mayor Robert T. Nance has advocated privatization as one way to cut city costs. Rather than hire more city engineers to buy rights-of-way for $76.9 million in road improvements approved by voters last year, Nance proposed contracting out that work.
Other council members said they were still weighing their budget options.
``I have to look at what any cuts will do to our future ability to pay our indebtedness,'' said Mayor William E. Ward. ``Our debt is increasing. If we reduce the rate, I have to ask, `Will that put a hole in our revenue that prevents the levels of services that we have and service we will need?' ''
The council will hear comments from the public on Tuesday before adopting next year's spending plan. Council members approved a long-range construction budget last month.
KEYWORDS: CHESAPEAKE CITY COUNCIL PROPOSED BUDGET REAL ESTATE TAX by CNB