THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Wednesday, January 8, 1997 TAG: 9701080359
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY KAREN WEINTRAUB, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: 75 lines
The city should be able to live without a significant tax increase for the next five years, staff members told the council Tuesday - as long as the Lake Gaston pipeline is finished on schedule and the council doesn't take on ``fun but not necessary'' projects such as a hockey arena.
``This is not a forecast of doom and gloom by any means,'' Director of Management Services E. Dean Block said in presenting his five-year projection. ``But we do face some challenges.''
As the city matures past its adolescence, Block said, it can no longer afford to do some of the ``fun'' projects possible in the past. The GTE Virginia Beach Amphitheater will pay for itself and so was worth building, Block said, but some regional pet projects, such as a proposed major league hockey arena, may not be.
New roofs and well-maintained schools are ``very unsexy things,'' Block said, but exactly what the city needs to invest its money in for the next few years if it is to maintain its services, balance its budgets and keep tax rates within reason.
``New needs will be hard to meet,'' he said.
Most of the financial news is good, Block told the council. Oceana Naval Air Station will have more people by the turn of the century than it did during the military build-up of the 1980s. The real estate market is fairly strong. And the risk of a serious recession is low.
On the down side, though, state aid to schools is not keeping pace with the need for funding, he said; the city will have $15.5 million in new expenses for employee retirement and other unavoidable costs; and used car prices look like they're going to flatten. The price of used cars has a huge impact on city taxes, Block said, because it determines how much personal property taxes will generate for the city's coffers.
Block said all of his projections would be thrown off if the Lake Gaston pipeline were not pumping water by mid-1998 as planned.
Once the pipeline is done, the city can allow new development, lure new businesses, save money and start spending some of its reserves, he said. The city has kept very high reserves over the last few years so its borrowing costs are not increased by bankers skittish about the city's long-term water supply.
``If we'd have had water, we'd have had our bond rating increased,'' Block said. That would lower the cost of borrowing money for city projects.
City Manager James K. Spore said the pipeline is the first topic of conversation every time the city applies for a bond.
``They don't ask when the light rail is going to be finished, or when the arena will be finished. They ask when we're getting water,'' he said.
The council asked Block to work up a projection for the city's finances if the pipeline cannot be completed on schedule.
In other business Tuesday, the council heard for the first time from the Minority Business Council it created 18 months ago.
The group has spent the time compiling data on the city's efforts to hire minority contractors and educating city staffers and major employers about the need to hire more minorities.
Vice chairman Edward L. Hamm said the group's research shows it has had some impact on minority hiring, but that the city's record is still far from good.
``There remains a need to improve procurement of minority business in the City of Virginia Beach,'' he said. ``To be a great city, we need to enable each group to be awarded city contracts.''
In the 1994-95 fiscal year, 13 percent of city construction contracts and 1.6 percent of contracts for goods and services went to minorities. In 1995-96, only 0.29 percent of construction contracts were awarded to minority prime or subcontractors, and 6.64 percent of goods and services were contracted to minorities.
So far this year, the numbers are a little more encouraging, Hamm said: 5.26 percent of construction contracts have gone to minorities and 12.15 percent of goods and services contracts.
The six-member, all-volunteer council, which plans to stay in operation for at least another year, will focus on further improving those numbers, attracting more minority bidders and recognizing companies that employ a large number of women and minorities, council Chairwoman Shewling Moy Wong said.
KEYWORDS: VIRGINIA BEACH CITY COUNCIL