| PROPOSED AMENDMENTS STRIP TAXPAYERS OF CONTROL OVER LOCAL SPENDING, DEBT AND TAXES|
By Mark A. Collins
Two constitutional amendments that will be on the
November ballot in Virginia pose an unprecedented danger to voter
control over local spending, debt, and taxes. The specific questions
that will appear on the ballot are as follows:
…Shall the Constitution of Virginia be amended to
authorize agreements among localities for sharing the revenues and
costs of a specified land area and establishing a special governing
body for the area, and to provide that fiscal commitments related to
the land area will not be deemed local debt?
…Shall the Constitution of Virginia be amended to
allow a combination of localities to contract debt as part of an
agreement to share the revenues, tax base, or the benefits of economic
growth and exempt this class of debt from the ceiling on local debt for
cities and towns and from the requirement for a local referendum for
Despite the startling step toward "taxation without
representation" that these proposed amendments represent, they
attracted surprisingly little attention as they sailed through both
houses of the Virginia legislature and received Governor Gilmore's
signature. No doubt the developers and other special interests who
stand to profit from the amendments were all too happy to keep the
issue shielded from voter scrutiny for as long as possible.
The time has come to subject the proposed amendments
to a critical analysis, however, and the Taxpayers Alliance believes
the measures fail miserably. These amendments, if approved, would allow
county government to issue bonds in limitless supply, without voter
approval, all in the name of "regional economic cooperation."
Specifically, the amendments would allow localities to join together
and finance new spending initiatives through debt that is "exempt . . .
from the ceiling on local debt for cities and towns and from the
requirement for a local referendum for counties." In simple terms, the
bureaucrats want a credit card with no spending limits and no right of
voter preapproval, financed by the taxpayers.
With no voter control over these future
bond issues, the Taxpayers Alliance believes the danger for
inefficiency and abuse is high, as developers and other special
interests will rush to take advantage of the situation. Unelected
bureaucrats from the local "special governing body" will be free to
authorize new spending, bond issues, and taxes without ever having to
face the voters. The resulting bond issues will inevitably result in an
increased burden on Fairfax County taxpayers to service the debt. These
and other considerations have already led the Washington Times and the
Richmond Times-Dispatch to publish recent editorials opposing the
The Taxpayers Alliance strongly opposes the proposed
amendments, and urges its members to vote against this new threat to
County passes $3 Billion Appropriated Expenditure Level
by Ludwig Benner
County General Fund expenditures will be $1.829 billion, or almost
$5400 per household and $1950 per person. Fairfax County's total
Government Proposed County expenditures for all purposes will be $3.065
billion, or almost $9000 per household in 1999. Twenty-five years ago
General Fund expenditures were about $540 per person. Previous
newsletters have described the $9 billion excesses in the County's
expenditure growth. How can taxpayers forestall those excesses in the
future, while assuring that proper County expenditures are supported?
Basis for budgeting County expenditures and revenues:
understand why the budget has grown, one must understand the basis on
which it was formulated. The Board of Supervisors adopted specific
Budget Guidelines for 1999 and 2000 on April 27, 1997, directing the
County Executive to limit increases in expenditures to projected
increases in revenues. Revenue growth was projected to be 4-5% during
those years. The Guidelines limit transfers to Public Schools to the
rate of the increase in revenues. They challenge and empower County
employees to look for long term savings, with one-time bonuses as
rewards. Sixty percent of targeted savings are returned to the County,
and 40 percent are returned for use at the agency director's
discretion. They require available balances thus materializing during
the year to be held in reserve for future needs.
County policy context for budget decisions is provided by Ten
Principles of Sound Financial Management which was adopted in 1975,
affirmed in 1985, and modified for bond sales targets in 1988.
development of any budget presents challenges to balance competing
demands for service with available resources. The County Executive
offers 12 factors affecting the 1999 Advertised County budget, which
the Board amends and adopts.
policies, guidelines and budgets are available at all County Public
Libraries. The Budget can also be viewed and downloaded at the County's
Internet site at http://www.co.fairfax.va.us/gov/omb The principles,
budget guidelines and County Executive's factors are posted at
New in FY 1999 budget
1998 Budget provided 1700 management indicators, almost 85% of which
were workload or output-related. The primary focus was on counting what
was done, rather than how efficiently a task was performed. The 1999
Budget initiated a transition to a more outcome-oriented system of
indicators, focusing on outcome as a critical member of the family of
measures. Each cost center in the 1999 Budget now provides for one or
more such indicators.
major change reflects a restructuring of senior management reporting
functions, as an efficiency improvement measure. This results in
changes in the budget accounts that will require diligence to identify
trends in expenditures accurately in the future.
FY 1999 Expenditures
County Government is a very large operation, by any measure. In FY
1999, expenditures for all appropriated funds for this County are
budgeted to be $3.065 billion-that's Billion - including
$1,832,476,851 Combined General Fund disbursements. That is an average
appropriated expenditure of $9000 per household, and $4575 for every
person more than 19 years old, or $3248 for every man woman and child
in the County. The proposed Combined General Fund disbursements -the
cost of operating the County government and schools -- are
$1,832,476,851, or $5381 per household - about 7.7% of the average
The proposed County revenues for FY 1999 from the Financial and Statistical tables of the Budget Overview are:
(less Internal Service Funds)
FY 1999 Revenue sources
revenues are derived from 78 County taxes, fees, assessments, user and
service charges, from State and Federal government transfers and
grants, from general obligation and revenue bond sales, employer and
employee contributions, developer contributions, return on investments,
rental income, borrowed funds for loans to homeowners, client fees,
tuition's, fares, private funds, seized funds, other jurisdictions,
cable franchise fees, and miscellaneous sources. The largest sources of
General Fund revenues (87.9%) are the real estate taxes (51.4%),
Personal Property Taxes (19.8%), and General and other Local Taxes
(Sales, Utility, BPOL, Auto Licenses and other). Revenues from State
and Federal Governments will be about 5.9% or almost $108,000,000. User
fees will provide 1.6% of revenues in 1999.
The Challenge for Taxpayers
complexity, how can taxpayers determine if the value received from
their Government is worth the price they are paying? The short answer
is, they can't.
FCTA newsletters have chronicled major growth and problem areas. The
individual cost centers and program fund summaries in the Budget
documents provide indications of what the County does with the money.
The activities are very diverse.
Budget documents are very comprehensive, and probably among the best
County budget documents in the nation. Unfortunately, they still lack
key information needed by the taxpaying "owners" of the County
Government to assess the benefit and cost tradeoffs. The shortcomings
- program "success "indicators
County's new initiative to focus on output measures is progress, but
appears to miss one primary element needed to assess program value
which is: who benefits and how do they benefit from the program, and
how will everyone know it is successful, without missing unintended
consequences? When new programs are instituted, the budget documents do
not report how can the advocates and taxpayers can determine who will
benefit if the initiative is a "success" in resolving the problem for
which it was created. This will vary with the type of program. To
illustrate this point, one main reason for providing a Fire and Rescue
department is to reduce losses in the community that would occur were
there not fire and rescue departments. Thus a measure of the
department's benefits is what reduction in losses or harm did they
achieve? Currently published measures, such as response time targets,
do not address this kind of "benefit" data need, nor do they permit
discourse about their place as a Government function. Who will benefit
from these initiatives, and how will those benefits be balanced against
- program life cycle information
County continues to change rapidly. How can the excessive growth that
occurred in the past be better controlled in the future?
way is to reduce revenues. Present policy forestalls that course of
action unless a recession or other outside factors force a reduction.
option is to determine the full costs before the initiatives are
adopted. Until life cycle costs of any new government initiatives are
provided citizens cannot adequate make judgments about the tradeoffs to
balance to arrive at their support or opposition. It would facilitate
citizen review if the County were to provide in list form new program
or agency initiatives with their life cycle costs and purposes for
third option is to review existing programs. With the County changing
so rapidly, periodic review of all existing programs will be essential,
since they all develop their own constituencies over time. Fairfax
County expects to write about 526,000 checks, each one potentially
reinforcing a dependency relationship on a County program. Many
discretionary programs funded by the County have existed for several
years. Most budget funds provide no indications of the age of current
programs or projects, nor their remaining estimated life cycle and life
cycle costs, except for bond funds. This impedes assessment of
continuing program expenditures.
- capital expenditure assessments:
common measure of value for investing money in capital assets like
buildings, equipment, land, roads, sewers, etc. is the payoff period,
or return on investment(ROI). One major reason for requiring this kind
of estimate before making an investment commitment is to force clear
articulation of expected value or benefit that will be achieved if the
money is invested in that asset. A second major reason is to force
consideration of alternative actions and risks. A third reason is to
permit the ranking of investment needs and options.
budget documents do not seem to recognize this need. For example, Fund
104 Information Technology has a budget for Network modernization: of
$500,000 for FY 1999, to be added to $2.74 million already spent The
Budget ROI statement on page 83 reads:
"Funding for this project provides enhancements and critical
modernization of, and investment in, the County's network
are the value, alternatives and relative ranking of these enhancements
assessed with such data? How can the ROI statement be used to assess
future performance? How does one compare before and after "enhanced"
Federal and State Mandates
estimates prepared by the County indicate that the County pays for more
than 75% of the $523 million for programs impacted by Federal and
State-mandated programs. The County's General Fund budget for 1996 was
$ 1.5 billion. The County's expenditures under these mandates should
not be construed as the specific level of program expenditures required
by the mandates, but it does provide an indication of the degree to
which imposed requirements impact County expenditures, for purposes of
assessing County expenditure levels and cost reduction opportunities.
Remember, 1999 receipts from Federal and State sources will be only
$108 million. How much will be excess expenditures, and how can they be
assessed? How much is essential and how much is in the nice-to-have
of future growth would be aided by knowing what others are paying for
comparable government services. What is the zone of reasonableness for
current or proposed programs and projects? The County is about to
embark on an extensive school construction project, where per room
costs, after financing, can be as high as $500,000. How can citizens
find out what other organizations - public and private - are paying for
comparable or alternative facilities? Public availability of such data,
perhaps outside the budget documents, is also needed to permit citizens
assess the value of their government's services.
County supports National Association of Counties and other similar
organizations. The Virginia State auditor publishes comparables for all
Virginia counties. Surely these organizations could help develop ways
to satisfy these data needs.
What can FCTA Members do?
1. communicate with their Supervisor and Delegate to ask for any or all of the changes described.
2. review budget cost center data and offer FCTA Board members their suggestions for benefit/cost measurements.
3. identify present programs that need to be reviewed and reassessed.
FCTA Opposes Bond Referendum
Madam Chairman and Members of the Board:
My name is Arthur Purves. I am
speaking as president of the Fairfax County Taxpayers Alliance. We
oppose the proposed $87 million bond referendum for parks and the $100
million bond referendum for public safety. Annual capital costs should
be paid for from operating budgets. Here are our concerns.
First, since 1995 the Countyís
debt service has exceeded the funds raised from bond sales by $90
million. If the County had paid for capital projects out of its
operating budget, it would have saved $90 million in the last four
years, enough to fund the parks referendum. The County is like a
homeowner that makes a yearly mortgage payment of $460,000 for a
$450,000 mortgage. The County is in this situation because by having
annual bond sales it is, in effect, buying a new mortgage every year.
Annual expenses should not be funded through borrowing.
Second, it appears that the County
is underfunding its capital needs. We are told that there is a $300
million backlog in storm drainage projects, a $40 million backlog in
County construction and maintenance projects, and an undetermined
backlog in transportation projects. Metro apparently has a $1 billion
maintenance backlog, of which Fairfax County has a share.
The school system has a $400
million backlog that is growing. The County Council of PTAs 1998 budget
statement reports that the school systemís Capital Improvement Plan,
which is underfunded by $100 million, renews only half as many schools
as is required.
Bond sales are not providing nearly enough funds to meet the Countyís capital needs.
Third, due to tax increases during
the 80s, the County collects $900 million more per year than it would
have if taxes and spending had not increased faster than population and
inflation since 1975. Of this, $600 million goes to the schools and
$300 million to the County government. Given this large increase in
revenue, why is it even necessary to sell bonds and why does a capital
construction backlog exist?
Last summer, the Fairfax County
Taxpayers Alliance asked both the School Board and the Board of
Supervisors where the tax increases had been spent. The School Boardís
response listed all programs that had grown faster than inflation and
enrollment and the FY98 cost of each. The Board of Supervisors response
had an incomplete list of programs that had grown faster than
population and inflation and failed to provide the cost of even the
programs that were mentioned.
Both the School Boardís and the Board of Supervisors responses are posted on the FCTA website, www.fcta.org.
The schoolís share was spent not
on capital needs but on the operating budget. Despite the extra money,
standardized test scores did not improve and student behavior
deteriorated. This happened because the school administration
implemented programs without setting measurable goals for them.
Since the schools are not spending
their extra $600 million a year wisely, the Board of Supervisors should
stop selling bonds for school projects and should require the school
system to fund all of its capital needs out of the school operating
budget. That would require only $200 million of the $600 million.
Since the Board of Supervisors
does not tell how it spends the $335 million of tax increases that the
County government gets each year, the Taxpayers Alliance had to do its
own analysis to get an estimate. We found that 75% of the tax increases
are spent in three areas: $43 million on County debt service, which
weíve already discussed; $84 million on public safety, and $190 million
on health and welfare. Employee benefits account for more than $50
million of the $335 million. We found that the cost of fringe benefits
per employee increased 70% since 1975, from $5800 per year to $10,000
per year (in inflation adjusted 1998 dollars).
While we have an idea of where the
tax increases are spent, we still do not know why the increases
occurred. We donít know, for example, why the cost of fringe benefits
The Social Services and Health
Departments received an extra $43 million. Transfers to the Community
Services Board increased by $48 million. The Facilities Management
Division received $9 million. The Office for Children received an extra
$26 million. The sheriffís office received an extra $22 million and the
police an extra $14 million.
Computer spending, which was not
reported as a separate item in 1975 now costs about $27 million. About
$10 million of this is offset by reductions in other County
administrative functions. Overall, computer spending appears to have
increased net administrative costs by $17 million.
Spending on transportation appears to account for only $20 million of the $335 million.
Again, these are Taxpayer Alliance
estimates. We would prefer to cite official County figures, but if they
exist, the Board of Supervisors will not release them to the public.
And again, we do not know why these increases occurred. Since taxes and
spending began escalating in the late 70s, the County has spent $3
billion more than was needed to keep up with population growth and
inflation. It concerns us that the County feels it can spend an extra
$3 billion, not report to the taxpayers where the $3 billion was spent,
and then ask approval for $187 million in new bonds.
In conclusion, we believe that the
County is not justified in asking for voter approval of the $187
million bond referenda next November. We believe that the County should
first explain why capital expenses cannot be funded from the $3 billion
in tax increases it has collected since 1975. Voters should not approve
the bond referenda until the Board of Supervisors answers the $3
Comments to the Fairfax County Board of Supervisors
Regarding the Proposed 1998 Bond Referenda
By Arthur G. Purves
President, Fairfax County Taxpayers' Alliance
June 29, 1998
Can We Reduce School Overcrowding Without Increasing Cost?
by Doug Barylski
Many Fairfax County
schools have been overcrowded for years in spite of repeated School
Bond referenda being passed. And the school system has no plan on how
to solve this problem any time soon. But the state legislature and Gov.
Gilmore have just given us a low-cost way to help the situation. And
the children donít have to wait years for relief.
The answer: a charter school. A
charter school is run under the oversight of our School Board, but is
not under the direction of the Superintendent. The charter school has
no requirement to use the bureaucracy of the regular public school
system, and is managed like a business. And the School Board can shut
down the charter school after only one year, for any reason. The law
allows no appeal. This shut down provision protects us from any flaky
business or education practice.
Thomas Jefferson High School is
similar to a charter school, in that it has a separate enrollment
process and many special courses. There are already hundreds of charter
schools all over the country, so there is plenty of experience with
A charter school could open in
September 1999, long before the normal school construction process
would be able to complete an addition or a new school. Thatís because a
charter school can lease space, like a former department store or a
A charter school wonít solve
the whole problem of school overcrowding in Fairfax County. But at
least some of our children can be helped, and without increasing taxes.
by Doug Barylski
This November you will see a
"Public Safety" bond referendum. But the majority of this bond issue is
for an expensive $92 million courthouse expansion.
Does the County need this courthouse expansion? We think not.
The master plan for the court
expansion shows an increase of 36% in space. But population and prison
population should grow at less than half that amount over the next
decade. Remember just a few years ago when the County built the new
Government center? Commonly referred to as the "Taj Mahal," the
Government Center clearly wasted a lot of space. The County then had to
buy two more buildings to get the space they wanted. So we are right to
be skeptical of the courthouse expansion.
In addition to all this, the
school system says itís short several hundred million dollars in bond
funds for school construction and renovation. We agree with the Fairfax
Journal* that our government should focus on what we really need in
this County. The Public Safety bond referendum should be sent back to
the planners for reconsideration.
The Fairfax County taxpayer should not be placed in "bondage" for an expensive courthouse expansion.
The Fairfax County Taxpayerís Alliance encourages you to vote "NO" on the Public Safety bond issue.
* Fairfax Journal editorial, June 26, 1998
TAXMONGERS: HERE COMES THE NEW
ALTERNATIVE MINIMUM TAX! LOOK OUT BELOW!
Writer wishes to remain anonymous due to past experiences with the IRS
This is the "sneaky tax." Back
in the old days, when I was making lots of money I got nailed very hard
on the AMT. The part that was hard to take is that my taxes are done by
an excellent husband-and-wife team, both of whom are CPA's! They use
computer technology and always compute my tax both ways; with and
In my case, the IRS used a
"machine audit" at the end of the three-year period and simply sent me
a bill. It was a bogus tax bill. The IRS neglected to enclose "the
attached statement," or even give a reason or a computation of why I
owed money. Several phone calls and a registered letter later, I
located the manager of the specific branch in the Philadelphia office.
Caught by surprise, he told me (by phone) that it was an AMT, computed
by someone in the bowels of the Philadelphia office. I asked for a
written accounting or summary. It was never mailed. This put me in the
position of "paying up" a bogus bill, or having to face a new
computation, another tedious and expensive tax-preparation exercise by
my accountants, and an audit. With the three-year expiration and no
desire to open up my returns so that something could be contested or
disallowed, I decided to cough-up the money. It was quite late for the
IRS to be going on a fishing trip.
Aside from the unfairness of an
AMT that will remove more legitimate deductions from the middle-income
taxpayer, it is also a "license to steal" for the IRS. Just send a bill
three years after the taxes were filed, blame it on the AMT, and watch
the money roll in. If the victim of this hijacking doesn't like it,
just bring the tax records and go through a hellish audit. For an owner
of a business, it is devastating, especially if the business is having
a bad year and fixed costs cannot be reduced.
This was another reason for an
old codger like me to take "vows of poverty" and live modestly and
happily. It is hard enough to work and make a significant amount of
money. But it is intolerable to spend one's limited free time to deal
with a rapacious organization that uses any means to confiscate what is
left after taxes! I am willing to "stay in compliance" and pay my fair
share. But I would rather not fight unsubstantiated tax claims from the
IRS. In the long run my decision to retire cost the government lost tax
dollars. I sent in a check and retired from work. I believe many people
retire each year partly to get out of the annual tax hassle!
FCTA Now Has Our Own Web Page
Check it out! Tell your friends!
We have a very
helpful source entitled "Contacting Elected Officials" which lists
County, State and Federal Officials as well as providing a means of
identifying your representative. Go ahead - call your supervisor and
let them know how they are doing.
Read FCTAís statement opposing the Board of Supervisors' proposed salary increase - (September 28, 1998). Between
1987 and 1991, the supervisors' salary increased from $21,589 to the
current amount of $45,000. Even after adjusting for inflation the
supervisors' salary without the proposed increase would still be 30%
larger in 2003 than it was in 1987. With the proposed increase, the
supervisors' salary would increase 70% since 1987. If this seems excessive to you, $59,000 for a part time job, call your supervisor and complain!
Remember! Itís www.fcta.org. Tell someone!
ANOTHER ABUSE OF POWER!
never forget the IRS agent who visited my son, Mike, age 39, who was in
terminal stages of Leukemia shortly before he died. Mike had been the
President of US operations of a Swiss company that made precision
measuring software equipment for manufacturers. My son lived in
Farmington Hills, MI at the time. The agent showed up at the home
unannounced on a Saturday morning. Although my son was no longer
associated with the company, the agent wanted to claim corporate
payroll taxes on a long-past FY quarter. There was no appointment or
previous written request. My son was under heavy chemotherapy and not
in very good shape. Before I left the room, I asked Mike (in the
auditor's presence) if the doctor would allow such activity at this
time. There was no indication of apology or contrition from the IRS
I was furious,
and left the room, but kept quiet because I had no direct involvement.
Fortunately, my son kept excellent corporate records in the basement of
his home and produced receipts and a canceled corporate check showing
the tax had been paid. Undeterred, the IRS inspector examined the
books, and to his consternation found that the IRS owed the Swiss
company approximately $300.
several Federal statutes and IRS "regulations" that were violated by
the IRS agent. The episode left a bad taste in my mouth. Fortunately it
was not a "seizure" or an armed raid. Unfortunately there is no
recourse by an ordinary citizen. I am further outraged by the attitude
of our federal, state and local elected representatives who feel that
our money is "their" money and present the taxpayer with false choices.
Our elected officials simply encourage illegal dealings by their tax
Name Withheld by Request
Previous newsletter (Summer 1998)