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Legislators optimistic about occupancy tax
By Mike Bollinger • Staff Writer
 | | Del. Jim Shuler (left) and State Sen. Creigh Deeds share a moment of conversation before Monday night's meeting with the Bath County Board of Supervisors. The supervisors discussed several topics with the two legislators. |
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WARM SPRINGS — State Sen. Creigh Deeds and Del. Jim Shuler are cautiously optimistic that special legislation allowing Bath County to use a portion of a transient occupancy tax increase for emergency services would pass the Virginia General Assembly during the upcoming session.
The two legislators discussed the proposed tax and several other issues with supervisors during a called meeting Monday at the Bath County Courthouse.
Currently, Bath collects a 2 percent occupancy tax. The county is seeking to increase the tax to 5 percent. Bath wants to use 2 percent of the increase for tourism and tourism-related expenses and the other 1 percent for emergency services.
"If you are behind it, it ought to pass. It requires a super-majority (four-fifths), but this shouldn't be a partisan issue. We just need to figure out the best strategy for getting it through," Deeds said.
Shuler said the business community has shown its approval through the Bath County Chamber of Commerce, the main business the tax would affect — The Homestead— has given its approval, and supervisors have shown affirmative action on the proposal by passing a resolution. These things, Shuler said, will greatly increase the legislation's chances.
"We will talk with Mike Edwards, your representative at the Virginia Association of Counties, and make sure the wording of the bill is exactly what we want. I will likely pre-file it in the House," Shuler said.
Deeds said he expects he can get the votes necessary to pass the bill in the Senate. "If we have any trouble, it will be in the House," he said.
Shuler said pre-filing the bill will help to find unknown opposition to it. "I expect concern from a couple of associations, particularly the Hospitality Association," he said.
Deeds said opposition could arise concerning the emergency services portion of the proposed legislation.
Board chairman Jon Trees, who along with supervisors Richard Byrd and Percy Nowlin attended Monday's meeting, said he has asked the sheriff's department to put together figures on how many of the county's 911 calls are tourist-related.
"The problem we may have is the precedent this could set," Deeds said.
Trees said the situation with emergency services volunteers in the county is at a critical point, and wondered if a portion of the 1 percent might be used for an incentive to attract volunteers such as allowing them to be placed under the county's hospitalization insurance.
"You need to be careful with that. I don't know if we want to broaden the issue a lot right now. There has been a lot of discussion about that in the past in other areas," Shuler said.
"There are those in the legislature that will not vote for any bill that imposes a tax increase anywhere in the state. You need a super-majority, so it's best you don't take any chances," Deeds said.
Shuler said now, the resolution passed by the board looks "straight-forward," and suggested board members and county ad- ministrator Bonnie Johnson plan to make a trip to Richmond when it is heard.
"We will do whatever it takes," Trees said.
Byrd asked if it appears the proposed legislation is going to fail, could the occupancy tax be increased only for tourism purposes. "We are shortcutting the chamber because we don't have the money to give them. I would go along with such an amendment," Byrd said.
Deeds said Byrd was correct in his instinct to take out anything that could weigh the bill down. Shuler said he hoped to be able to find any opposition before the bill is heard.
Education funding
Nowlin, retired superintendent of Bath County Public Schools who currently serves as interim superintendent in Highland County, said, "My heart is with the schools.
"Education is the largest portion of the county budget, and we are faced with 100 mandates. A lot of that is for remedial and special education teachers. We are faced with a 10 percent cut in state funding, and in Highland and Bath that could cost us $200,000. You can't get but so much out of the taxpayers," Nowlin said.
"If I were running a county or a school system, I would look at the next three years as lean times. I would look at how you can operate most efficiently. We have not seen the worst of it yet," Shuler said.
Shuler said it will likely take at least 18 months for the national economy to recover, and then there is an eight- to 12-month "lag time" for that recovery to show up in revenue. "We are looking at two or three tough years at least," he said.
The cuts, Shuler said, will likely be felt most in public education and Medicaid. Shuler said education was "out of the picture" this year because there was no way to change funding in the middle of the school year. "It's going to be painful. Everybody will have some pain," Shuler said.
"I would ask them to relax the mandates across the board. We know it's (funding cuts) coming, and we are not denying they are going to be. That would make it easier for us to fit the cuts where they are least disruptive to the kids, citizens and taxpayers," Nowlin said.
Deeds said the most costly mandate is special education, and that is a federal mandate. Deeds also noted the power in the legislature used to be in Western Virginia, but has now shifted to Northern Virginia and down the Interstate 95 and 64 corridors to Richmond and the Tidewater area. Fairfax County, he said, now has 14 percent of the state's population and provides 28 percent of the state's tax revenue, and wants to see more that money remain in Fairfax.
"Cutting education funding is like eating your seed corn," Deeds said. "We have to resist those cuts to every extent possible."
Deeds said he has thought for a long time that the education funding model in North Carolina was better than Virginia's. It pays localities based on the number of teachers.
"But, they don't have the same overall education performance Virginia does, so I'm not totally sure if that would work here or not," he said.
Deeds also addressed the potential Medicaid cuts. "If you cut Medicaid, we're going to pay one way or the other. Now, 70 percent of Medicaid is going to nursing homes. Until we figure out longterm care, we will have trouble with Medicaid," he said.
Shuler said when asking that mandates be relaxed, the supervisors should be as specific as possible. "You should run this by the Virginia Association of Counties, the Virginia Municipal League and the state school board association. You want to be careful what you ask for, because there could be a diminishing effect on the other side," he said.
Byrd wondered how much deregulation has affected the state budget. "We are losing money. We are paying people with taxpayers' money instead of telling them what to do," he said.
Shuler said that was hard to answer, and mentioned that the Virginia Department of Transportation has cut employees over the last several years and now privatizes services such as mowing and snow removal.
Deeds said that in 1993, then Gov.-elect George Allen sent a letter announcing the layoffs of VDOT employees when he took office.
"I think we can trace the disruption to the transportation trust fund to that act. The result today is that 40 percent of the bridges and tunnels statewide are structurally deficient. The money for construction is being eaten up by maintenance costs. It makes sense for us to develop a transportation plan that will put people to work," Deeds said.
Shuler said he expects a movement in the General Assembly to change the funding formula for transportation to favor urban areas. "Funding for rural Virginia will get critical. We're outvoted even if all the parties vote together," he said.
Trees asked where Deeds and Shuler thought the cuts would come from.
"Everything is on the table," Deeds replied. "Everyone who is dependant on state services needs to look at this budget very carefully. We will be taking a good, hard look at everything we do on the state level. I think everything you can imagine will be subject to cuts. It's going to affect everybody."
Byrd said the Bath board would likely make its cuts where the state does. "We can't continue as a local government to continue to fund state government within our government. If they cut education 10 percent, can we cut education 10 percent?" Byrd asked.
Shuler said local boards have to address their needs to the best of their ability.
Nowlin asked if the legislators could help Bath County get more money from the Dominion Power pumped storage generating facility in Mountain Grove. The facility is in the process of a large project in which turbines are being refurbished, creating more generation capacity.
"They (Dominion) are telling us we will not get an increase. They are saying this is a maintenance project and there will not be that much of an increase in generation. If they are getting more kilowatt hours, it is not maintenance, it is a major construction project. They ought to be paying for it," Nowlin said. "The problem is that the State Corporation Commission tends to be influenced by Dominion and Appalachian (Power). Somebody needs to watch the henhouse."
"This is not just maintenance. This is an upgrade," Trees said. "We have been told there will be no increase in revenue because maintenance money is being used for the project. Regardless of how much they are increasing their output, they are increasing revenue."
Emergency services
Byrd addressed a recent letter from the state forbidding its employees to answer emergency calls while at work. Trees said that decision affects one of the county's two cardiac technicians.
"How can we ask the private sector to allow its employees to answer calls if the government doesn't allow it?" Byrd asked.
Johnson said while Bath has the second smallest population of any Virginia county, it is the 19th largest in land area. "Our emergency services have to run so far to catch all the calls that we need every person we can get," she said.
Taxes, taxes
Bath County has to have a new reassessment on the books by 2011, and Trees noted had the previous one not been thrown out in March, many people would have had to sell because they would not have been able to pay their taxes. Trees wondered if it were possible for individual localities to freeze assessment values on properties such as farms with a certain number of acres and for those who cannot pay their taxes now.
"This is the best thing we could do for people who have been in Bath County for generations. If the property were to change hands, it would go to the new assessed value," Trees said.
Deeds said there is legislation introduced almost every year by Northern Virginia representatives that would require localities to assess property every year. Deeds said a big factor in determining the composite index for state education funding to localities is assessed property value.
"They think rural areas get more money because they don't reassess often enough. I think that (freezing assessments) would be difficult to do. You have to be able to get fourfifths to vote with you on special legislation," Deeds said.
Most farmland in Bath is taxed under a special land use district. In response to a question from Shuler, Byrd said those who apply for and receive the land use designation see about a 50 percent reduction in taxes.
"There are a lot of large farming operations under land use and not a lot of family farms. The large ones are trying to protect their tax status and we have to put up with so the real farmers can get land use," Nowlin said.
Byrd added that a lot of forest land in the county is becoming protected by conservation easements, which reduce the tax burden on owners. Shuler said the conservation easement fund is currently capped at $100 million statewide and he expects that will be looked at along with everything else at the state level.
Johnson said she recently received a phone call from Patrick County, and Patrick saw the same result as Bath in its ongoing reassessment. "Property values there have increased from 77 to 800 percent and they are evaluating what to do," she said.
"If we come back with an 85, or 100, or 600 percent increase, we can't do anything about it. You can't lower the tax rate enough to offset it. There is no way to offset a 100 percent increase," Byrd said.
Deeds said if the tax rate is reduced to offset an increase, then even less money would be received from Dominion Power. By not having a reassessment for six years, Deeds said he expects Bath will see an increase in property values.
At the conclusion of the meeting, Nowlin perhaps best summed up the feelings of the Bath board. "The best you can do for us is to try to keep them (state) from killing us," he said.
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