Tax hike cover-up: County candidates hiding $186 million post-election tax hike -- Taxpayers need to question candidates before the election!
$186 Million Tax Hike
However, you can read about it in the Fairfax County Adopted Fiscal Year (FY) 2012 Budget and in the Fairfax County Public Schools FY2012 Approved Budget.
We are currently in FY2012, which runs from July 1, 2011 to June 30, 2012. This January, the school board will propose its FY2013 budget. In March, the supervisors will advertise their FY2013 budget.
The County FY2012 Adopted Budget Plan Overview volume, page 199, forecasts a "FY 2013 shortfall of approximately $140 million". This forecast assumes a five percent growth in the county budget and a five percent increase in the county's annual transfer to the Fairfax County Public Schools (FCPS). Revenues are expected to grow much more modestly.
FCPS gets 70 percent of its funding from the county supervisors. In FY2012, the county payment (or "transfer") to FCPS is $1.6 billion.
Schools Want More
Increasing the school transfer from 5 to 7.9 percent increases the county's FY2013 budget shortfall from $140 million to $186 million.
How big is $186 Million?
The principal way the county supervisors can increase revenue is by raising real estate taxes.
Businesses residing in Fairfax County pay only twenty percent of county real estate taxes, leaving households to pay the remaining eighty percent.
There are almost 400,000 households in Fairfax County. If these households have to pay eighty percent of a $186 million tax hike, that comes out to an average tax increase of $370 per household.
Taxed Enough Already?
During the housing bubble, supervisors used soaring assessments as political cover for raising taxes. However since the "housing bubble" ended and assessments have decreased, supervisors have not lowered real estate taxes; instead they've kept the taxes at the 2007 level of about $4800. (See top line on graph.)
The $1500 Tax Hike
74 cents, not $1.085
However, if real estate taxes had increased only at the rate of inflation since 2000, today's real estate tax rate would be 74 cents instead of $1.085.
An Extra $655 Million
So by setting the rate at $1.085 instead of 74 cents, the supervisors obtain an extra $655 million. This raises two questions: With an extra $655 million, why does the county forecast a $186 million budget shortfall next fiscal year? Also, where did the $655 million go?
Ask Your Supervisor Candidate
Generally, the demand for county services should increase about as fast as population and the demand for school services should increase about as fast as enrollment.
Between 2000 and 2012, Fairfax County population increased ten percent, and most county programs saw spending changes in the range from -8 percent to +22 percent.
However, there are three surprises:
Why the High Cost of Employee Benefits?
One of the main reasons for medical inflation is that patients now pay so little out-of-pocket for medical services that patients have no incentive to be discriminating consumers -- to shop for the best price, to check the bill, to question whether a medication or procedure is really needed.
Medicare, Medicaid, and private insurers like it that way. Medicare and Medicaid's goals are to provide "affordable" healthcare, i.e., healthcare with low out-of-pocket costs. Private insurers like paying a high percentage of our medical expenses because it means more profits.
In contrast there is much less inflation in dental care, because a higher percentage of dental care costs is paid out of pocket.
Pension Unfunded Liabilities
The good news is that two of the three plans are funded just above the 80 percent level and the third plan is close, at 77 percent.
The bad news is that to maintain the solvency of the plans in the current recession, the supervisors increased payments to all three pension plans.
In FY2012, the county contributes to the County Employees' plan an amount equal to 17.2 percent of the county employees' payroll, compared to 6.15 percent in FY2000).
The contribution to the Police Officers' plan is 31.3 percent of the police payroll, compared to 18.8 percent in FY2002.
The contribution to the Uniformed Retirement plan, for sheriff personnel and animal control officers, increased to 33.81 percent compared to 18.95 percent in FY2002.
Public Sector Better Compensated
However, the press release cautions that public-sector workers tend to be older and better educated than in the private sector. The real question, then, is whether state and local government pays more than private industry for the same skills.
In CEPR's study, The Wage Penalty for State and Local Government Employees (May, 2010), the Executive Summary (page 1) states that comparable "state and local workers actually earn 4 percent less, on average, than their private-sector counterparts".
The CEPR study however only considers wages, not employee benefits. Since state and local government workers are far more likely to have pensions than private workers, one can conclude that state and local government is better compensated than private industry.
Wanted: A County Job
Generous School Transfer
How schools are funded
While the county budget is spread across about a hundred funds, FCPS is spread across only ten funds and is much easier to analyze. Between FY2000 and FY2012, FCPS spending increased $287 million more than needed to keep up with enrollment and inflation.
Employee Benefits Cost Most
The number of employees increased somewhat faster than enrollment. Increasing staff faster than enrollment cost an extra $60 million.
Increasing inflation-adjusted operating expenses cost only $14 million, as operating expenses are a relatively small part of the budget. Increasing inflation-adjusted salaries cost $52 million.
But the increase in inflation-adjusted employee benefits cost the most - $160 million
FY2000 4.6% FY2004 4.6% FY2008 4.5% FY2001 7.6% FY2005 5.6% FY2009 4.5% FY2002 5.6% FY2006 5.6% FY2010 0.0% FY2003 4.6% FY2007 5.6% FY2011 0.0%
Raises are the sum of an annual (for most employees) step increase and a "Market Scale Adjustment". Since all teachers receive the same raise, these are average raises. In private industry a 4% raise would be an above-average merit raise.
Virginia Retirement System in Trouble
The state of Virginia boasts that it ended the last budget year with a $545 million surplus. If all that were handed over to the VRS, the VRS would still have a $19.5 billion unfunded liability.
FCPS Compensation Competitive
Candidates are avoiding important, controversial budget issues! To get answers and raise awareness of other taxpayers, ask these questions when a candidate:
- Asks for money - Knocks on your door - Emails you - Contacts you by email - Speaks at a gathering - Participates in a forum
If you get written or video responses, please forward to firstname.lastname@example.org.
The Fairfax County Taxpayers Alliance analyzes Fairfax County, Virginia, and Federal budgets. We publish the FCTA Bulletin, which explains budgets, exposes excesses, and offers solutions. We also maintain a website (www.fcta.org), testify at county and school budget hearings, and attend budget town halls. We've been quoted in the DC Examiner and Washington Post. The Superintendent of Schools, the Chairman of the Board of Supervisors, and Governor McDonnell know who we are! Use this form or join online at www.fcta.org. We need your help to reach more taxpayers. For additional memberships, simply enclose a check with the new member's name, address, and email.
Current members: Please renew if the date on your mailing label is before November 1, 2011. 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. Mail To: Name(s)_________________________________ Fairfax County Taxpayers Alliance Address_________________________________ P.O. Box 356 City/State/Zip__________________________ Fairfax, Va. 22038 Telephone_______________________________ 703-281-0176 B2011-1 Email____________________________________________
To receive FCTA press releases and tax alerts, please provide your email address.
Jamie Radtke, candidate for the Republican nomination for U. S. Senate, and state-senate-candidate Gerarda Culipher will address the FCTA annual luncheon and taxpayers' workshop! Please RSVP by Tuesday, Oct. 4. See back cover of this Bulletin for details. Also, FCTA District Directors (names in bold) are up for election at the meeting. To vote, members must be Fairfax County residents and have FCTA dues paid up.
Officers President: Arthur G. Purves First VP: Alexander Romero Second VP: Bill Peabody Treasurer: Arthur Purves (acting) Secretary: Jim Turbett At-Large Arthur Purves Directors The Hon. David C. F. Ray Perry Young Bill Peabody Fred Costello Gary Koerner Alexander Romero (two vacancies) District Braddock: vacant Directors Dranesville: Thomas Cramner Hunter Mill: David Swink Lee: vacant Mason: Jim Turbett Mount Vernon: vacant Providence: vacant Springfield: Bradford Butler Sully: Chuck McAndrew
Saturday, October 8, 2011 -- 11:30 a.m. to 2:00 p.m.