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HomeMy WebLinkAbout10/13/2004 - Special October 13, 2004 825 Roanoke County Administration Center 5204 Bernard Drive Roanoke, Virginia 24018 October 13, 2004 The Board of Supervisors of Roanoke County, Virginia, met this day at the Salem Civic Center, Salem, Virginia, this being a special meeting for the purpose of attending the Regional Legislative Luncheon with Roanoke Valley legislators. IN RE: CALL TO ORDER Wayne Strickland, Executive Director of the Roanoke Valley-Alleghany Regional Commission, called the meeting to order at 12:05 p.m. The roll call was taken. MEMBERS PRESENT: Joseph P. McNamara, Joseph B. “Butch” Church, Michael A. Wray MEMBERS ABSENT: Chairman Richard C. Flora, Vice-Chairman Michael W. Altizer STAFF PRESENT: Elmer C. Hodge, County Administrator; Diane D. Hyatt, Chief Financial Officer; Mary V. Brandt, Acting Clerk to the Board LEGISLATORS PRESENT: Senator John Edwards,Delegate William Fralin OTHERS PRESENT: Josh Myers, aid to Delegate Morgan Griffith; elected officials and staff from the City of Roanoke; City of Salem; Town of Vinton; City of Covington; County of Alleghany; County of Botetourt; County of Franklin; representatives from the Roanoke Valley-Allegheny Regional Commission; Beth Doughty, Roanoke Regional Chamber of Commerce; Tim Thornton, Roanoke Times October 13, 2004 826 IN RE: WELCOME AND INTRODUCTIONS Mayor Sonny Tarpley, City of Salem, welcomed the Roanoke Valley legislators to this annual meeting and introductions were made. He introduced new Salem Council Member Jane Johnson. Council Member John Givens, City of Salem, gave the invocation. Mr. Strickland distributed the agenda and a handout to accompany the Taxing and Funding presentation. He announced any material presented today would be sent to the legislators who were unable to attend. IN RE: REVIEW OF LEGISLATIVE ITEMS Education: Mayor Brad Gross, Town of Vinton, asked the General Assembly to fully fund the Standards of Quality. He stated that the Commonwealth has an obligation to fund the Standards of Quality on the basis of realistic costs that reflect actual education practices including capital, operating, and maintenance costs. Mr. Strickland added that this has been a priority for some time and remains a key issue. Local Authority: Council Member Harrison Scott, City of Covington, asked the General Assembly not to pass legislation that takes away local government authority over land use issues. He noted that in the past, legislation had been proposed that would require manufactured housing to be permitted “by right” in all residential zoning districts. Such legislation would directly affect the power of local councils and boards to control land use in their communities. October 13, 2004 827 Mr. Strickland noted that this is an on-going issue in the Commonwealth. Transportation: Supervisor Joseph McNamara, Roanoke County, asked the General Assembly to require the Virginia Department of Transportation (VDOT) to find a funding mechanism to expedite the widening and improvements to Interstate 81 as quickly as possible. These improvements are necessary to enhance safety and promote the economy of this region. The communities in western Virginia cannot wait 30 to 40 years for the widening of I-81 to take place. Council Member Rupert Cutler, City of Roanoke, added that the Commonwealth should plan for the development of rail freight parallel to I-81 to facilitate moving long-distance freight traffic from trucks to freight trains to compliment widening the interstate. He also requested that the General Assembly fund implementation of passenger rail service in the Roanoke to Bristol corridor. He noted that rail service would provide a good multi-modal addition to the highways and airports currently serving the region. Taxing and Funding: Elmer Hodge, Roanoke County Administrator, asked Diane Hyatt, Chief Financial Officer for Roanoke County; Jesse Hall, Finance Director for the City of Roanoke; and Frank Turk, Finance Director for the City of Salem, to join him in his presentation since these are the chief financial officers for the three area localities most affected by the changes being made to the personal property refund from the state. October 13, 2004 828 Mr. Hodge reported the major area of concern is the shortfall of $250 million dollars in the 2006 state budget representing payments that are owed to localities that bill personal property taxes in the spring due to Senate Bill (SB) 5005. These localities currently receive their reimbursement from the State within the current fiscal year; however, SB5005 shifts the payment of this reimbursement to the following fiscal year with no guarantee that the payment will be made on a timely basis. Mr. Hodge stated that this legislation could create deficit situations which are illegal and have an effect on the bond ratings for these localities. This will be the position of one- third of the State’s localities. Mr. Hodge noted that the current promise to pay the spring billing localities in July of 2006 is a one-year promise at best. This means that Roanoke County is in danger every year of losing $10.5 million dollars of budgeted revenues. If this does turn out to be only a cash flow problem, Roanoke County will need to be able to cover $10.5 million dollars for up to a three-month period (April through June) each year. Mr. Hodge stated the second area of concern is localities will now be required to adopt two or more tax rates each year and show these rates on the tax bill. The computation to arrive at the “reduced rate” will require estimation for the effect of proration which will involve the risk of over or under collection. He noted that the “reduced rate” will increase every year making it appear that the locality is increasing the tax rate. October 13, 2004 829 Diane Hyatt, Chief Financial Officer for Roanoke County, summarized the position Roanoke County will be in financially as a result of SB5005. She stated that Roanoke County is concerned because they receive $10.5 million dollars from the State each fiscal year. Due to this legislation that is already in place, the County will not receive any reimbursement from the State during 2006 in the April through June time period and will have to wait for the next fiscal year to get the $10.5 million dollars that is already part of its budget. The County has been told that it will receive this money in July 2006 so that it can be accrued back which is not part of the written legislation. She noted that there is no guarantee that the State will reimburse the County, which could place the County in the position of losing the money and not finding out about it until the budget year is over and the money has already been spent. Ms. Hyatt also commented on the difficulty presented by the tax rate computations that will be required on the tax bill. The bill will have two rates: the total rate and a computed reduced rate which reflects the money the State will be reimbursing. In order to come up with the reduced rate, the County will have to make assumptions on the amount of money received from proration during the rest of the year. So the County will be at risk of either over billing or under billing the personal property tax. She noted that there is an example of the car tax calculation on page 4 of the handout that illustrates what the localities will have to do to compute the estimated reduced value tax. The amount paid by the State remains stable from year to year and is a level $950 million spread out over the State. The reduced rate that is seen by October 13, 2004 830 citizens on their tax bill will rise each year making it appear that the locality is raising their personal property tax. Council Member Cutler asked if this would be more evident in a growing county rather that a stable locality such as a city. Ms. Hyatt answered in the affirmative adding that increasing car values will also have an effect. Senator Edwards added that the $950 million cap is just that – a cap. There can be many things that can have an effect on the estimated reduced value such as the number of cars not only in the locality but the State as a whole. Jessie Hall, Finance Director for the City of Roanoke, stated this is more than an accounting problem: the amount budgeted by the state for fiscal year 2006 is $720 million dollars not the $950 million that is the actual cost of the program. Mr. Hall added that while the car tax shortfall and tax calculation are the two major issues, there are several other aspects of SB5005 that are of concern. The Virginia Municipal League and the Virginia Association of Counties will send out further information in the future. Mr. Strickland questioned if cars valued under $1,000 could be added back on the tax rolls. Mr. Hall responded that this decision will be up to each locality. Frank Turk, Finance Director of the City of Salem, stated that Salem’s shortfall will be $2.5 million dollars, and the amount valley-wide will be approximately $20 to 21 million dollars. He added that if the State did not make up these shortfalls as promised, the localities affected will have deficits which are illegal. This will be a October 13, 2004 831 serious, on-going problem unless the State guarantees the money will be there; otherwise the affected localities will have to increase local tax rates to compensate. Mr. Hall added that local governments also need to keep track of House Bill (HB) 1174 enacted last year which deals with restructuring taxation on the telecommunications industry. This tax will function similarly to a sales tax. The Office of Public Accounts is currently undertaking a study to determine if the revenue generated by this new legislation will replace the revenues from the aggregate of all the current methods of taxation. This must be done before the legislation will take effect. Mr. Hodge concluded that there are no easy answers to the problems caused by SB5005 and asked the valley legislators to help rectify the situation now. He noted that the process has to be fair to all localities. Mr. Strickland reported that there were several other concerns he wished to address. First, the General Assembly should eliminate the differences in taxing authority between cities and counties; second, the General Assembly should not limit or restrict existing local revenue sources; and, finally, the General Assembly should restore funding to Virginia’s Regional Competitiveness Program. He added that although progress has been made, there is still a need for overall tax reform. IN RE: COMMENTS FROM SENATORS & DELEGATES Senator John S. Edwards: He reported that the Standards of Quality are now fully funded, and the State has added $1.5 billion dollars in new money for October 13, 2004 832 education as part of the tax reform plan. He thanked Delegate Fralin for his vote on the plan in the House. Senator Edwards stated that the $21 million dollar problem caused by SB5005 will be fixed. He added that everyone, including the Governor, will be working on it. Senator Edwards expressed regret that funding had been cut for the Virginia’s Regional Competitiveness Program due to budget shortfalls in the last three years. He noted that while tax reform is still necessary, much has already been done. Senator Edwards reported that the Secretary of Transportation has cut the 6-Year Transportation Plan by 28 percent, the State is using construction funds for road maintenance, and the situation is getting worse. The only answer is either to implement tolls or raise taxes. He stated that tolls will not work and raising the gas tax to develop a revenue stream needs to be addressed. He noted that Virginia’s gasoline tax is the lowest in the mid-Atlantic area. He also indicated that transportation problems need to be addressed on a statewide basis. Regarding the use of rail transportation to help alleviate congestion on I- 81, Senator Edwards agreed that this would be a good solution for getting long-haul trucks off the road. He advised that rail service is a cost effective solution; however, rail infrastructure will need upgrading to make this viable. Josh Myers, (aid to Delegate Morgan Griffith): Mr. Myers expressed Delegate Griffith’s regrets that he was unable to attend due to a scheduling conflict. He October 13, 2004 833 stated that Delegate Griffith will work to help solve the problem with the car tax relief bill. Mr. Myers added that he would relay the concerns expressed today to Delegate Griffith. Delegate William Fralin: He reported there were significant funding increases in education and the Standards of Quality are now fully funded by the State as they should be. Delegate Fralin stated he would work diligently to resolve the car tax relief bill issue. He added that this was not the intent of the bill, and stated that he will keep the localities affected by the change informed of progress. He noted that this is part of the tax reform issue and that part of the problem is the use of State dollars to fund a local tax. He indicated that the system needs to be reformed. Delegate Fralin reported that he has been appointed to a task force dealing with transportation issues. He stated that tolls to encourage better use of roads is one option being examined, but that a long-term solution to the area’s transportation problems will require a variety of funding mechanisms including working with federal legislators to get a fair share of gas tax funds as Virginia is currently a donor state. He stated that this issue needs to be addressed. Delegate Fralin stated that he can be reached at anytime at 776-7499 or on his cell phone at 520-3565, and he thanked everyone for the invitation to today‘s summit. October 13, 2004 834 IN RE: CLOSING COMMENTS Mr. Strickland thanked everyone for attending. He reported that he would send the material covered during the summit to those legislators who were unable to attend. He thanked the City of Salem for hosting the event and reported that the next Mayors and Chairs meeting will be hosted by Alleghany County in November. Craig County will host the next regional summit meeting in the early spring. Supervisor McNamara reiterated that the funding shortfall is a major concern. He added that no one knows how the auditors will react to the budget deficits this bill creates, and the bill is bad from an accounting standpoint. He also stated that the structure of this legislation dictates the rate to be charged and how the bill has to be prepared. He noted that this will change every year, making it seem as if localities are raising taxes. He further advised that the possibility of implementing a one-percent (1%) local sales tax to replace revenue generated by the car tax needs to be examined. IN RE: ADJOURNMENT The meeting was adjourned at 1:45 p.m. Submitted by: Approved by: ___________________________________________________ Mary V. Brandt Joseph P. McNamara Acting Clerk to the Board Supervisor