2007: FCTA opposes Northern Virginia Transportation Authority (NVTA)
-- Fortunately the Virginia Supreme Court declared NVTA-imposed fees as unconstitutional
--Also the General Assembly repealed the "Civil Remedial Fees" after a public outcry

Since 2000, Fairfax County homeowners have experienced record tax increases. In the 19 years preceding 2000, the inflation-adjusted real estate tax for the typical Fairfax County homeowner increased by only $120. However since 2000, the typical homeowner's inflation-adjusted real estate tax increased by $1900. See graph, above.

When inflation is included, Fairfax County residential real estate taxes doubled between 2000 and 2007, increasing at an average rate of ten percent per year. During the same period, Fairfax County estimates that taxpayers' household income was increasing two percent per year.

Now, as a result of the transportation bill (HB3202) passed by the General Assembly on April 4, 2007, three more rounds of increased taxes and fees are authorized.

The General Assembly and governor approved these increases even though inflation-adjusted state General Fund revenues (primarily income and sales taxes) have, for decades, been increasing ten times faster than population (see graph).

The first round is a set of statewide increases that became effective on July 1, 2007. These are:

• "Civil Remedial Fees" which are assessed for certain traffic violations (see pdf file). For example the penalty, not including court costs, for failing to give proper signal or driving with an obstructed view or driving 20 MPH or more above the speed limit or driving over 80 MPH will be $1050, payable over 26 months (projected to raise $62 million in FY2009);
• Increased diesel fuel tax, from 16 cents to 17.5 cents per gallon ($21 million in FY2009);
• Increased annual vehicle registration fees. For most Virginians the increase will be from $29.50 to $39.50 ($62 million in FY2009); and
• Increased registration fees for heavy trucks ($27 million in FY2009) and higher fines for overweight trucks ($3 million in FY2009).

FY2009 revenue estimates are from the Northern Virginia Transportation Alliance website.

These new fees and taxes combined with new revenues from the General Fund surplus are expected to provide $500 million in new transportation funding statewide annually.

The second round of new taxes and fees applies to the Northern Virginia and Tidewater regions. These taxes and fees are imposed by regional transportation authorities, the Northern Virginia Transportation Authority (NVTA) and the Hampton Roads Transportation Authority (HRTA). The NVTA voted to impose these taxes and fees, which are estimated to produce $300 million annually, at its meeting on Thursday, July 12, 2007:

• Tax on home sales will increase an additional 40 cents per $100 bringing the total state and local grantor/recordation taxes to 86.66 cents per $100, up from 46.66 cents per $100. This would increase the tax on a $600,000 home from $2,820 to $5,220 ($164 million in FY2009);
• A new initial vehicle registration fee equal to one percent of the value of a vehicle the first time it is registered ($63 million in FY2009);
• A new five-percent tax on auto repairs ($33 million in FY2009);
• A two-percent increase in hotel and motel occupancy taxes, on top of the current two percent to five percent tax ($23 million in FY2009);
• A ten-dollar increase in automobile safety inspections from $15 to $25 ($16 million in FY2009);
• Another ten-dollar increase in annual vehicle registration ($17 million in FY2009). Combined with the statewide increase, the vehicle registration fee for most Northern Virginia residents would increase from $29.50 to $49.50; and
• A two-percent tax on car rentals, from 10 percent to 12 percent.

In the original version of HB3202, each county's board of supervisors had to approve regional tax and fee increases.

However, according to Virginia Governor Kaine's official website, the Governor amended the bill to let the regional transportation authorities to levy the taxes and fees but only after a majority of localities' governing bodies voted to approve the tax and fee increases.

Surprisingly, the final version of HB3202 includes no such requirement for Northern Virginia, although it does include that requirement for Hampton Roads. Compare lines 2520-2525 on page 42 with lines 2472-2487 on page 41 of HB3202 (pdf version - has line numbers) or (HTML version - does not have line numbers).

State Senator Jeannemarie Devolites-Davis, who sponsored the bill in the Virginia senate, told FCTA president Arthur Purves that she expected that the NVTA would not raise the taxes unless the localities had first voted their concurrence.

However, on June 20, the FCTA emailed Fairfax County Chairman Gerry Connolly to ask if Mr. Connolly, a voting member of the NVTA, were going to vote for the tax hike without first asking the Fairfax County Supervisors to vote on it. The FCTA received no answer. The Fairfax County Office of Public Affairs has confirmed, though, that Chairman Connolly has not scheduled either a public hearing or a vote on the regional tax hikes.

The third round of taxes and fees authorized by HB3202 are to be approved by individual counties and cities and could raise $100 million annually:

• Increase commercial real estate taxes up to 25-cents per $100 ($83 million in FY09 based on a rate of 8-cents per $100);
• Local Registration Fee: $10 ($17 million in FY09)
• Commercial/Residential Impact Fee: (to be determined)

The Fairfax County Board of Supervisors will vote on these taxes and fees next year, after supervisor elections in November.

Rally today - Rain or Shine! In case of rain, the rally will be held in Rooms 2 and 3 of the Fairfax County Government Center. Enter the main entrance and turn left. Walk about ten yards, and Rooms 2 and 3 will be on your right. Fox News has said that they will be there. Also, see today's Washington Times article, Fairfax County draws protests over budget.

Fairfax County Taxpayers Alliance NorthernVirginiaGOP.com Libertarian Party of Northern Virgnia TAXPAYER RALLY Protest out-of-control taxes! Monday, April 3, 2006, 6:30—7:30 p.m. in front of the Fairfax County Government Center Just before the Board of Supervisors 7:00 p.m. Budget Public Hearing 12000 Government Center Pkwy Fairfax VA 22035 (near Fair Oaks Mall) Questions? Email rally@fcta.org or phone 703-642-5567

Taxpayers or Unions? Whom will the Supervisors see at the budget hearings?

Download Handout about rally to distribute to your neighbors!

The cost of interest for bonds increases the price of a new school by forty percent.

The school system's response is that government needs bonds just as homeowners need mortgages. This is invalid. For a homeowner, the cost of a new house is many times larger than the homeowner's income. For government, however, the annual cost of building construction and renovation is only about ten percent of annual revenues.

If Fairfax County Public Schools cannot find in its $2-billion yearly budget $200 million for buildings, how then is it able to increase staff four times faster than enrollment?

A homeowner's annual mortgage cost is only about one-tenth of the amount borrowed. However, due to excessive bond sales, Fairfax County each year spends about as much repaying old bonds as it gets from selling new bonds. Fairfax County is $2 billion in debt. How can the County justify owing $2 billion when the amount it borrows each year is the same as the amount it repays for bonds already sold?

Probably an academic point today, but I would agree that pay as you go,
of course, avoids borrowing costs.  It requires, however, that taxes be
increased to pay the cost today.  In terms of these bonds, that means a
one time tax increase of $200+ million in 2005.  I didn't understand
FCTA to be arguing for that approach, i.e.. a $200 million tax increase.
From a policy standpoint, hard also to understand why FCTA argues for
imposing, via a tax increase in 2005, the cost of 30-year facilities on
this year's tax payers, versus spreading that cost over the 30 year
using population, which bonds would do.

Not a tax increase; spending reductions:  elementary school guidance 
counselors as well as middle and high-school guidance counselors, social
workers, psychologists, office workers, administrators, computers (which
have not improved achievement but have driven up administrative costs); 
seven-period day, which probably lowered academic achievement by 
diluting students' time over seven subjects instead of six; elementary 
school Physical Education teachers (students need recess two-three times a day;
not gym twice a week; Professional/Technical Studies which is an expensive
fad that tries to give job training to college-bound students but has not 
resulted in higher achievement or significantly greater employability; 
reading resource teachers ...  Enormous savings would be achieved 
through phonics-based reading which would result in far fewer children 
being (unnecessarily) stigmatized as learning disabled.  You would also 
have fewer discipline problems if all students could read.  The 
proliferation of magnet programs has made the neighborhood school a 
relic.  If we had quality schools, magnet programs would not be
necessary.

If you quote this, please quote in context, i.e, state the reasons given
for the reductions.

Despite increasing real spending nearly ten-times faster than 
enrollment, the average senior's SAT score is only at the 65th 
percentile.  Sixty-eight percent of Fairfax County Public Schools 
graduates attend four year colleges.  However, 35 percent of
college freshmen don't graduate (within six years). When you add
graduates going to community colleges, it is likely that
under 60 percent of Fairfax County Public Schools graduates will earn 
Bachelors degrees.  Given that 57 percent of Fairfax County adults are 
college graduates, it appears children of college graduates will
become college graduates.

Virginia's real spending on public schools has also been increasing ten
times faster than enrollment.  Yet the National Assessment of Education 
Progress reports that 65 percent of Virginia students score below grade 
level.  There has been no progress in closing the high school minority 
student achievement gap, despite all the lip service and extra money.

The solution is a traditional curriculum, which public schools have 
resisted for half a century.

Of the $1.4B 2004 Virginia tax hike, $1B went to public schools, even 
though public school real spending had been increasing ten times faster 
than enrollment.  The Virginia Education Association has a great scam 
going:  lobby for spending increases at the local level and then go to 
the state and say that state spending is not keeping up with local 
spending.  Mark Warner's remedy for higher local taxes is higher state 
taxes.

Regarding the second point, do you really want to increase the cost of a
building just to spread its cost over twenty years (most bonds are 
twenty-year bonds)?  Why not save money and pay up front?  Wouldn't we 
be better off without a $2B debt?  Then if there were a crisis, we would
have reserve debt capacity for borrowing.  As it is, our debt capacity 
is nearly exhausted.

I find the argument is still very simplistic and the author lacks an
understanding of government finances. Also the analogy is appropriate.  If
this person wanted to pay for all the investment projects up-front it would
be many times available revenue (government income).  Thus he is either
advocating not to build schools, roads, or libraries (my guess) or a very
substantial increase in taxes to pay for these when they are built.
 
I can understand this argument for recurrent costs but not capital
expenditures. 
 
Have the author read about the golden rule of government spending. Basically
it says that you need to be able to cover recurrent costs (including interest
payments) from recurrent revenue. Investment spending (for roads, schools, etc),
is designed to provide a government with a rate of return to cover future
interest payments associated with these projects.  It is not quite this simple
as one also needs a debt rule but this is a good first approximation. If I
remember correctly Fairfax has a rule about interest payments not being
greater than xx percent of revenue. If this is their debt rule, I would say
it is well designed
 
One other issue I did not want to bring up, is that if they finance by
borrowing, the rate of interest is artificially kept low because of the tax
deductibility of municipal bounds. On the other hand if they pay for it with
tax money (our money), the cost to us is the opportunity interest rate which
is much higher.

For Fairfax County, capital expenditures are, in fact, "recurrent":  The
County spends about $200M per year on capital projects.  Therefore the
golden rule, to pay for recurrent costs from recurrent revenues, is an
argument against selling bonds.

Regarding the debt rule, the County limits debt service (annual interest
and principal payments for bonds already sold) to ten percent of the County
budget.

The "opportunity cost" due to the low interest rate on tax-free municipal
bonds is cancelled out by the taxes we would pay on higher-interest
taxable investments.

> I find that this is one of the worst arguments I have ever read. The 
> person who drafted this has no idea what is meant by the cost of 
> borrowing or what is the purpose of interest or why people borrow. The 
> alternative would be raising taxes many-fold in the year when government 
> programs are undertaken.
>  
> If you made the same argument about buying a house you would find that 
> the cost of buying a house could more than double?  Does this mean we 
> should not borrow?. What makes this argument even more ridiculous is 
> that the longer the terms of borrowing the more it would supposedly 
> increase the cost
>  
> Lets take a loan for 100,000 with an interest of 7%. 
> If the loan is for 30 years the total interest paid is  140,000 which is 
> greater than the loan
> If the loan is for 20 years the total interest paid is  86,000 which is 
> also a large number
> Guess what?  If we repaid the loan in one year the interest is only a 
> little over 7000.
> By the argument in this email we should repay in 1 year
>  
> However rather than paying a little less than 8000 a year to service the 
> 30 year loan, the government would have to come up with 108000 in one year. 
>  
> I have not checked lately, but Fairfax County has an excellent bond 
> rating and it wood not have achieved it, if they had undertaken poor 
> debt management.
>

As stated above, comparing the County to the homeowner is invalid.

The homeowner has to borrow because the cost of a house is many times greater
than his annual annual income.  Moreover he has to repay over 20-30 years to
get his mortgage payment down to a fraction of his income.

However the County does not have to borrow since building costs (new
construction and renovation) are only about ten percent of the County budget.

Former Virginia governor and senator Harry F. Byrd, Sr., understood this
and insisted on government pay-as-you go financing instead of borrowing.

You can have an excellent bond rating even when you borrow unnecessarily.  
The bond underwriters won't penalize you for selling more bonds than you need;
they want the business.

The 2004 Fairfax County Bond Referendum

Put the brakes on Fairfax County's $2-billion debt! Vote NO on bonds on November 2

Download flier (pdf file) to copy and distribute to neighbors and at polling places. Taxpayers Alliance Urges Defeat of Bond Questions, Washington Post, Fairfax Extra Voters Guide, pg VA26 (10/28/04)

On election day, Fairfax County has placed on the ballot four bond referendum questions asking voters to approve a total of $325 million in new bonds. BONDS ARE NOT FREE. Fairfax County is already $2 billion in debt. The interest cost for bonds is nearly half of the amount of the bonds. To sell the $325 million in bonds, the County will have to pay an additional $150 million in interest, and that is with low interest rates and a Triple-A bond rating. Actually, because the County is so deeply in debt, it is limited to selling $200 million in bonds per year, which cost nearly $100 million in interest. The County also has to pay back over $200 million of its debt this year. This has been going on for decades. Each year the County sells bonds to raise revenues that are about the same as its annual payment on the debt for bonds already sold. The enormous interest cost of the bond sale increases the size of the steadily-increasing debt. If the County had never sold bonds, it could have used for maintenance and construction the money spent on annual debt payments. The County would have had nearly the same amount to spend but not be $2 billion in debt. Of course the County reveals none of this in its "Citizen Information" flier about the bond referendum. This flier was mailed at taxpayer expense to all Fairfax County households. Contribute online to the FCTA to help combat the Fairfax County Board of Supervisors heavy-handed advocacy of more debt! FCTA Press Release: Connolly, Hudgins silent on $2-billion debt. (10/25/04) FCTA Press Release: Supervisors mislead voters about bonds. (10/9/04) FCTA Press Release: Virginia Education Association orchestrates a billion-dollar tax hike for over-funded public schools while transportation gets nothing. (9/14/04) FCTA Letter to the Editor: Vote 'no' on county bonds referendum, Times Community Newspapers (10/15/04) FCTA Letter to the Editor: Vote 'No' on Bonds, Connection Newspapers (10/7/04) More information: What the Fairfax County Board of Supervisors does not want you to know about the bond referendum!.

FCTA participation in the campaign to defeat the 2002 sales tax referendum. More taxes won't fix gridlock! Oct 31 02 - Stop-the-sales-tax flyer: Taxation by Misrepresentation (PDF file) Sep 20 02 - More taxes won't fix gridlock! (html version) Sep 20 02 - More taxes won't fix gridlock! (pdf version) Sep 4 02 - FCTA PRESS RELEASE: Warner won't rule out another raid on transportation sales tax revenues

Fairfax County Taxpayer Alliance 2002 Sales Tax Referendum Campaign Finances

BEGINNING BALANCE	Beginning Balance:				$9,000.00
EXPENSES
ITEM	PAYEE	PAID	AMOUNT	SALES TAX	TOTAL
Website	Patriot.net	9/5/02	20.00		20.00
Projector rental	Holiday Inn-Ballston	9/7/02	40.00		40.00
Flyers	DM Group	9/13/02	331.75	16.59	348.34
Projector rental	Brooke Rental	9/24/02	25.00	1.38	26.38
Stakes	Jim Wilson	9/26/02	781.86	30.14	812.00
Flyers	Executive Press	9/30/02	685.00	30.83	715.83
Website	Two Radical Technologies	10/02/02	10.00		10.00
Transparency film	Staples	10/7/02	23.91	1.08	24.99
Projector rental	Brooke Rental	10/8/02	25.00	1.38	26.38
Website	2rad Technologies	10/15/02	10.00		10.00
Bumper Stickers	Executive Press	10/17/02	225.00	10.13	235.13
Signs	Executive Press	10/17/02	1250.00	56.25	1306.25
Fundraising Letter	Executive Press	10/17/02	664.70	22.30	687.00
Annual Meeting Postcard	Executive Press	10/17/02	268.70	4.48	273.18
Bulletin mailing (750)	Executive Press	10/18/02	520.29	12.64	532.93
Stakes	Jim Wilson	11/8/02	283.25	12.75	296.00
Ad	Sun-Gazette	10/25/02	822.25		822.25
Ad	Connection	10/25/02	1906.74		1906.74
Ad	Washington Post	10/25/02	1958.00		1958.00
Annual Meeting	Marco Polo Restaurant	10/26/02	710.83	60.42	771.25
Projector rental	Brooke Rental	10/26/02	25.00	1.38	26.38
Ad	Washington Times	10/30/02	2115.00		2115.00
Total Expenses:			$12,702.29	$261.73	$12,964.02
RECEIPTS
	Memberships	10/7/02			80
	Fundraising Letter	10/15/02			2523
	Fundraising Letter	10/18/02			740
	Fundraising Letter	10/21/02			676
	Fundraising Letter	10/25/02			1080
38 contributions	Annual Meeting	10/26/02			1093
	Shenandoah Electronic Intelligence	10/29/02			1500
Total Receipts:					$7,692.00
ON HAND:		10/30/02			$3,727.98