Taxes remain high while assessments decrease
During the 2000-2007 housing bubble, when residential assessments increased 178 percent, the Fairfax County Board of Supervisors used the higher assessments as political cover to increase real estate taxes
The supervisors did decrease the real estate tax rate, from $1.23 to 89 cents, but not enough to offset the increase in assessments. The result was that between 2000 and 2007 residential real estate taxes for the typical Fairfax County household doubled, from $2400 to $4800. So while the average Fairfax County residential assessment increased 178 percent, the average nominal (i.e., not adjusted for inflation) real estate tax increased 100%.
The argument was that since housing values were up, homeowners were richer and could afford higher taxes.
Now residential assessments are decreasing, by three percent in 2008 and a record 12.5 percent in 2009. However, the supervisors are increasing the real estate tax rate to offset lower assessments. This year they offset the three-percent decrease in assessments with a three-cent rate increase, from 89 to 92 cents. Next year, they are proposing to offset the12.5 percent decrease in assessments with a 13-cent rate increase, from 92 cents to $1.05. The result is that next year’s average residential real estate tax will be $4800, the same as in 2007.
If next year’s rate were left at 92 cents, the average real estate tax would be $4300 instead of $4800.
If the supervisors had increased real estate taxes at the same rate as inflation since 2000, next year’s rate would be 72 cents, not $1.05; the average residential real estate tax would be $3300, $1500 less than the $4800 average tax that the supervisors are proposing.
The following is FCTA testimony at the January 21, 2009, budget hearing held by the Fairfax County School Board. This testimony is also posted on www.fcta.org. Click on the “Testimony” link.
Dr. Dale and Members of the Board:
The Superintendent’s FY2010 budget contemplates a $200M ($200M) cut that would increase class size by two students.
However, the Superintendent does not acknowledge that since FY2000, school spending increased $429M more than needed to keep up with enrollment and inflation. At his budget press briefing, we asked the Superintendent how much of that increase was spent on fringe benefits. He did not know.
More than half of the $429M was spent to give school employees higher raises ($110M) and better benefits ($151M) than taxpayers get.
Between FY2000 and FY2007, residential real estate taxes increased ten percent per year. Raises for school employees were over five percent per year. According to the County Executive, homeowner incomes were increasing two percent per year.
According to the Bureau of Labor Statistics, nationally 79 percent of state and county workers but only 20 percent of private workers have defined-benefit pensions. Seventy-two percent of state and county workers but only 52 percent of private workers have employer-provided health insurance.
FCPS academic excellence merit this generous compensation?
Last year, 68 percent of FCPS seniors planned to attend four-year colleges. We asked the Superintendent what percentage would graduate from college. He did not know. A good estimate is 50 percent. The top three FCPS high schools for probability of college graduation are Thomas Jefferson (100%), Langley (83%), and Woodson (67%). College graduation probabilities for all FCPS high schools are posted on the Fairfax County Taxpayer Alliance’s homepage, www.fcta.org.
We asked the Superintendent what percentage of Learning Disabled students are successfully remediated. He does not know. However, a 2003 school-funded study of Special Education Services by the Gibson Consulting Group found that SOL failure rates at special-education-centers were worse than the county average, even though there were only three students per instructor.
Control costs. Cap defined-benefit pensions and switch to 401Ks, as the private sector is doing.
According to a 1/12/09 Robert J. Samuelson column in the Washington Post (“Obama's Health-Care Headache”), healthcare inflation occurs primarily because government and employer-provided health insurance have dramatically reduced the consumer’s out-of-pocket costs. Hence demand and prices have soared. The federal government borrows from our children to pay the bill; businesses drop health insurance. Do what the private sector should do: restrict healthcare insurance to catastrophic coverage only.
If the schools had maintained equality between public and private compensation, you would have no deficit and no need to increase class size.
THE FAIRFAX COUNTY TAXPAYERS ALLIANCE WEBSITE WWW.FCTA.ORG
Between FY2000 and FY2007 the Fairfax County Board of Supervisors and School Board took advantage of the housing bubble to increase spending and taxes.
County real (i.e., inflation-adjusted) spending for everything other than public schools increased, between FY2000 and FY2006 four times faster than population (27% vs. 7%.) Even after three years of flat or declining spending since 2006, county non-school real spending has increased over two times faster than population (21% vs. 8%) since FY2000.
Similarly Fairfax County Public Schools real spending between FY2000 and FY2009 increased three times faster than enrollment (33% vs. 10%). School staff increased nearly two times faster than enrollment (19% vs. 10%).
Therefore the higher taxes enacted during the housing bubble were larger than needed to keep up with inflation, population, and enrollment. This bulletin addresses where the extra taxes were spent.
Unlike the school board, which increased staff twice as fast as enrollment, the supervisors appear to have restrained the increase of county non-school employees, which grew nearly the same as population (11% vs. 8%).
However, Supervisor Pat Herrity (R-Springfield) observes that the county has two categories of employees: “merit” employees, who qualify for benefits and merit raises, and “Limited Term” (LT), who do not. The county budget only publishes the number of merit employees. Mr. Herrity suggests that the number of LT employees has increased significantly. Indeed, between FY2000 and FY2007, the budget for LT employees increased three times faster than population and inflation. The FCTA has asked the Office of Management and Budget for the number of LT employees between FY2000 and FY2009 and is awaiting the reply.
In FY2000, the Fairfax County non-school budget was $1,333M (in FY2009 dollars). To keep up with population and inflation, the budget needed to increase to $1,440M. However, the budget increased to $1,617M ($177M more) because it grew faster than population and inflation.
Likewise the school budget needed to increase from $1,823M to $2,005M to keep up with enrollment and inflation. Due to growing faster than enrollment and inflation, it increased $429M more, to $2,434M.
Thus the total cost of the county and school budget growth in excess of inflation, population, and enrollment between FY2000 and FY2009, was $606M ($177M + $429M).
The county claimed a $650M shortfall in developing the FY2010 budget. However, if the county had not increased spending faster than inflation, population, and enrollment, the shortfall would have been $606M less, or only $44M.
Uncharacteristically, Fairfax County began last summer to predict a shortfall in the county’s FY2010 budget. Last July 18, the Deputy County Executive briefed the supervisors and school board about a predicted $350M shortfall. By the fall, the county was holding “Community Dialogue Sessions” seeking public input for dealing with what had become a $450M shortfall. By January, the shortfall had grown to $650M.
The FCTA has asked the county executive and school superintendent to announce the budget outlook before November supervisor and school board elections. Our requests have gone unanswered. It now appears that the county knows the budget outlook well before elections but withholds that information from the voters.
County gets better raises and benefits than taxpayers
The Taxpayer Alliance attended county “Dialogue Sessions” about the FY2010 budget. We asked how much of the county’s FY2001-08 spending increase was “due to personnel growth and how much is due to compensation and benefit increases?” The response was that that information was not available.
The FCTA then did its own analysis. We found that of the $606M increase, $255M was for salaries, $229M for benefits, and $119M was to increase school staff twice as fast as enrollment. The remainder was to increase county staff. There was a net decrease in operating expenses.
According to a March 8, 2008, county briefing on FY2001-08 spending increases, slide 24 states that average county raises ranged from 4.03 to 5.3 percent.
According to a spreadsheet accompanying an April 12, 2006, email from the school system, average annual school raises from FY2000-07 were 5.5 percent for non-teachers and 6 percent for teachers. The average school raise this year is 5 percent.These raises are higher than raises for private-sector taxpayers. In his Feb. 26, 2007, presentation to the Board of Supervisors, the County Executive stated, “Incomes have not kept up with house prices: Since 2001, income has risen 9%.” Assuming that the 9 percent increase occurred between 2001 and 2006, homeowner incomes were increasing two percent per year while taxes were increasing ten percent per year so county employees could have raises of four to six percent per year.
Higher taxes are paying for generous county and school defined-benefit pensions, while private sector taxpayers are losing their pensions.
According to the Bureau of Labor Statistics (BLS), nationally 79 percent of state and county employees but only 20 percent of private-sector employees have defined-benefit pensions.
Likewise higher taxes are paying the high cost of county and school health insurance while private-sector employees are losing health insurance.
Again, BLS reports that nationally 72 percent of state and county workers but only 52 percent of private workers have employer-provided health insurance. As the cost of health insurance increases, private employers drop it, but government raises taxes to continue it
The county justifies generous raises and benefits as necessary to compete with neighboring counties and school districts, which also pay better than the private sector. This argument is flawed since the schools get 11 applicants for every job opening and the county is now getting 100 applicants for every job opening.
In its FY2010 Proposed Budget Highlights, Fairfax County Public Schools (FCPS) states that it is “... a nationwide model for academic excellence ... .” Highlights cites SAT scores, Virginia Standards of Learning (SOL) test results, Advanced Placement (AP) test results, and a Newsweek magazine survey that ranks all FCPS high schools in the top four percent nationally. The Newsweek survey is based on the percentage of high school students taking advanced courses.
FCPS has successes. There are effective teachers, motivated students, and appreciative parents. Thomas Jefferson may be the highest-achieving high school in the nation.
FCPS should do well nationally because Fairfax County, along with Montgomery and Howard counties, is the best-educated county in the United States. According to the 2006 Census Bureau American Community Survey, nationally 27 percent of adults have four-year college degrees or higher, compared to 59 percent for Fairfax County, 58 percent for Howard, and 57 percent for Montgomery County.
However, not all students do well. All parents want their children to graduate from college. At the school superintendent’s budget press conference this January, the FCTA asked what percentage of FCPS seniors will earn four-year college degrees. The superintendent responded, “I do not know.”
Last year, 68 percent of FCPS seniors planned to attend four-year colleges. Based on attrition data available from the State Council of Higher Education in Virginia (SCHEV), the FCTA estimates that there will be a 26-percent attrition rate for FCPS college freshmen. For FCPS overall, while 68 percent of all seniors may go to four-year colleges, only fifty percent of all seniors are likely to earn four-year college degrees. See the FCTA web page, www.fcta.org, for estimated college graduation rates by high school.
FCPS reports that the Virginia SOL program has accredited all FCPS schools. However, to pass SOL tests, students need only to score at the “proficient” level. “Proficient” corresponds to passing or “D” level work. A better indication of college preparedness is the SOL “advanced” level rating. The accompanying graph shows that in 2008, only 25 percent of all FCPS high school students tested achieved the “advanced” score on high school SOL science tests.
Similarly, the 2008 ACT college admissions test results for FCPS reported that only 43 percent of FCPS students tested were prepared for college-level science and 38 percent were prepared for college. The ACT tested 25 percent of FCPS seniors while all students take the SOL tests.
For all Virginia public high schools, the SCHEV reports that about 20 percent of graduates who enroll in college require remediation.
Guidelines for these spending reductions:
Maintain equality between private and public-sector compensation.
Do not increase class size.
Do not cut sports.
Rescind county and school salaries increases funded by the housing bubble. Savings: $230M
Comment: Even with a ten-percent reduction, the average annual raise between FY2000 and FY2009 would be higher than the private sector average raise.
Rescind county and school benefit increases funded by the housing bubble. Savings: $100M.
Comment: Even if county and school employees pay ten percent more for benefits, they will still have better retirement and health coverage than most private-sector employees.
Also, schools average 11 applicants for every job opening. The county averages 100 applicants for every job opening. Except for police, sheriff, and fire and rescue, there is no need to compete with neighboring counties.
Additional recommendations for school spending reductions that do not increase class size:
Eliminate the seven-period day and high school academies. Savings $50M (estimated)
Comment: Diplomas require 24 credits, which the six-period day provides. This provides considerable savings without increasing class size, and allows students to focus their study time on fewer subjects. This does not eliminate vocational education.
Reduce Elementary School Guidance Counselors by 100 percent. Savings: $15.6M
Reduce HS/MS Guidance Counselors by sixty percent: Savings: $15M.
Reduce Social Workers and Psychologists by 75 percent: Savings: $20M
Comment: Social Workers and Psychologists participate in the Individualized Education Plan (IEP) process, which is time consuming, reduces the time teachers have to teach, and does not necessarily raise achievement. While the process is federally mandated, schools could request a waiver or the school board could declare its schools to be charter schools to streamline the IEP.
Reduce Elementary School Assistant Principals by 100 percent: Savings: $17M.
Reduce Technical Specialists by 50 percent. Savings: $26M.
Comment: This would principally reduce the personnel for administering computers, which would require a significant reduction of computers in the classroom. However, it is not clear that computers generally raise achievement.
Reduce school clerical staff by 50 percent. Savings: $25M.
Comment: Clerical staff has increased over the past twenty years, but the school-funded study justifying the increase did not identify the increased clerical workload.
Drop the International Baccalaureate Program: Savings $3M.
Comment: Use the less-expensive AP program instead.
Reduce the contribution to the Virginia Retirement System (VRS) by 50 percent. Savings: $88M
Comment: The schools’ VRS contribution is one of the fastest growing budget items, having increased from $85M in FY2000 to $176M in FY2009 (adjusted for inflation). It is not fair to expect taxpayers, who are losing defined-benefit pensions, to make up for an increase in the VRS unfunded actuarial liability. This liability was large prior to the recent stock market collapse and is now larger.
1. Between 2000 and 2007, Fairfax County residential real estate taxes doubled. During that time did county non-school spending increase faster than population and inflation? FCTA Answer: Yes.
2. By how much? FCTA Answer: Since 2000, county non-school spending has increased two times faster than population and inflation.
3. What is the extra cost? FCTA Answer: $177M
4. Did spending by Fairfax County Public Schools (FCPS) increase faster than enrollment and inflation since 2000. FCTA Answer: Yes.
5. By how much? FCTA Answer: Since 2000, FCPS spending has increased three times faster than enrollment and inflation.
6. What is the extra cost? FCTA Answer: $429M.
7. As of January, 2009, the county projected a $650M budget shortfall. What would the shortfall have been if county and school spending had increased at the same rate as inflation, population, and enrollment since 2000? FCTA Answer: $44M
8. How much of the county’s and school system’s spending increase in excess of inflation, population, and enrollment went to benefits (pensions, health insurance, …) and raises? FCTA Answer: Of the $606M spending increase between FY2000-09, $484M went to raises and benefits.
9. How do county and school benefits compare with private-sector benefits? FCTA Answer: According to the Bureau of Labor Statistics, nationally 79 percent of state and county workers but only 20 percent of private-sector workers have defined-benefit pensions. Likewise 72 percent of state and county workers but only 52 percent of private-sector workers have employer-provided health insurance.
10. How do county and school raises compare with private-sector raises? FCTA Answer: Between 2001 and 2007 county and school raises where two to three times higher than private sector raises.
11. Why do the county and school system pay better than the private sector? FCTA Answer: Because the county and school system compare their compensation to neighboring counties and school districts and not to the private sector.
12. If the county and schools paid less than neighboring jurisdictions, wouldn’t they lose employees? FCTA Answer: The school system has 11 applicants for every job opening and the county has 100 applicants for every job opening.
13. But county officials say that many applicants are unqualified. FCTA Answer: Aren’t most applicants public-school graduates?
14. What percentage of Fairfax County Public Schools graduates get four-year college degrees? FCTA Answer: The school system does not know. The FCTA estimates that fifty percent of Fairfax County public high school graduates will obtain four-year college degrees. Visit WWW.FCTA.ORG to see estimates for all FCPS high schools.
15. Most Fairfax County public schools are accredited by the state. Doesn’t that mean that these schools have high standards? FCTA Answer: To be accredited, students must score at or above the “proficient” level on Virginia Standards of Learning (SOL) tests. However, proficient means “barely proficient” and corresponds to passing or “D” level work.
We urge you to join or rejoin the Fairfax County Taxpayers Alliance.
We urge this, acknowledging that there was no bulletin last year, and if you had signed up for FCTA Internet email “tax alerts,” there were few of those. We want to publish four bulletins annually, but the last time we did so was in 1999. Until last year we have published one or two per year.
We get feedback that members wonder why they have not heard from us.
We are volunteers. We do this evenings and weekends, while balancing work and family commitments.
Also we research what we write.
County and school budgets total $4 billion. Their annual budget documents total over 1500 pages.
Analyzing how a seven-year $600-million tax increase is spent takes time. That is why this bulletin was not mailed last October.
County and school administrators and board members do hear from us. We attend the school and county annual budget press conferences, where we ask the questions listed earlier in this bulletin. We testify at the annual school and county budget hearings and at the annual January hearing held by the Fairfax County delegation to the Virginia General Assembly. The annual taxpayer rally (please attend!) also gets press coverage.
This is the first bulletin in which we have recommended specific budget cuts totaling hundreds of millions of dollars.
In monthly FCTA board meetings we anxiously debate the wisdom of explicitly advocating large spending cuts, knowing that there will be opposition. However elected officials and candidates will not vote or campaign for spending cuts unless voters support them. This will not occur until someone starts a public discussion of more than token spending cuts. If we do not start the discussion, who will?
Help us. Please send in your membership now or join online at www.fcta.org. We need to show grassroots support for smaller government, less taxes.
Have you renewed your FCTA membership for 2009? Please renew if the date on your mailing label is before April 1, 2009.
Please take the time now to return this membership form with your dues and, if possible, a contribution. Thank you.
_____Enclosed is my annual FCTA membership dues of $15_____I’m enclosing an extra contribution of $____________I would like to volunteer. Please contact me.
Name(s)____________________________________ Mail To: The Fairfax County Taxpayers Alliance
Address___________________________________ P.O. Box 356
City/State/Zip_______________________________ Fairfax, Va. 22038
Telephone__________________________________ 703-281-0176 B2009-1
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Monday, March 30, 6:00 PM
the Fairfax County Government Center
Just before the Board of Supervisors 7:00 p.m. Budget Public Hearing
12000 Government Center Parkway Fairfax VA 22035
(Near Fair Oaks Mall)