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2000 Summer Bulletin


With a six percent real estate tax increase after her 1995 election and a five percent increase after her 1999 election, Fairfax County Board of Supervisors Chairman Katherine K. Hanley has raised the taxes paid by the average Fairfax County household to a record high of $3754. This is a 24 percent increase in household taxes since 1981 after adjusting for inflation. With inflation included, average household taxes have increased 200 percent since 1981. Household taxes include real estate, personal property, sales, and utility taxes.

Spending increase graph

In her July 1, 2000, budget letter to the citizens of Fairfax County, Chairman Hanley stated, "... General Fund direct expenditures for County operations increased just 4.42 percent over FY 2000." This would mean that county expenditures did not increase faster than population and inflation. Unfortunately, her figure ignores county transfers to other funds, including the public schools, and does not show the increase since last year’s adopted budget. The truth is that county total General Fund Disbursements, which is the sum of transfers and of the direct expenditures referred to by Hanley, have increased 9.6 percent over the FY2000 Adopted Budget. This is more than twice as much as the increase in population and inflation.

Virginia state taxes and spending are also at record highs.

Both local and state tax increases are driven primarily by school and social spending, which in turn divert money from badly needed transportation improvements. No matter how much a thriving economy drives up tax revenues, schools and social programs always claim to require more than is available, thus precluding overdue tax cuts. Neither schools nor social programs offer accountability measures to justify their spending sprees. On the contrary, the public school advocates are lobbying to eliminate the Virginia Standards of Learning tests, which are the state’s very first attempt to set academic standards for school accreditation and meaningful standards for high school graduation.

Not withstanding recent tax increases, schools, business, local, and state government are poised to lobby for more tax hikes. The Transportation Coordinating Council of Northern Virginia, an advisory group of locally elected officials, has approved the "Northern Virginia 2020 Transportation Plan", which advocates higher income, sales, and gasoline taxes plus more tolls to pay for $14 billion of new highways and rail.

In December of this year, the Commission to Study Virginia’s State and Local Tax Structure for the 21st Century will probably recommend tax increases to the state General Assembly.

Moreover, the Virginia Baseball Stadium Authority just released a study trying to justify $300 million of state bonds to build a 48,000-seat baseball stadium with 5000 club seats and 100 suites.

This issue of the FCTA newsletter will address these issues in greater detail. The quick reply for politicians, business leaders, and newspaper editors who demand higher taxes is to ask them what we have gotten for the enormous tax increases we have already had.

By Arthur G. Purves

The Fairfax County Taxpayers Alliance Newsletter - Summer 2000

Stadium Analysis is Off-base

By Perry H. Young

Dr. Stephen Fuller of George Mason University recently released his study of the economic impact of building and operating a Major League Baseball stadium in Northern Virginia. He claims that a public subsidy of such a stadium would make a good investment for Virginia citizens. Under closer scrutiny, many of his arguments are not as strong as they may first appear.

Dr. Fuller claims that over the thirty year span of the stadium’s proposed financing by public bonds, the revenue generated by direct taxes on stadium operations and induced economic activity in the area of the stadium would more than pay for the cost of the bonds that financed it. His analysis does not anticipate the unavoidable ups and downs in game attendance as the fortunes of the team change, nor does he mention the well-established "honeymoon effect" that predicts a sharp drop-off in fan attendance at games after a period of high attendance early in the stadium’s operation. He also does not seem to anticipate the inevitable requests for additional funding for improvements to the stadium. His paper does not include one example of a stadium that consistently generated enough revenue to pay for the costs of bonds issued to finance the stadium. Many counter-examples exist. For example, according to Bruce W. Hamilton and Peter Kahn’s article, "Baltimore’s Camden Yards Ballparks", included in the book Sports, Jobs & Taxes: The Economic Impact of Sports Teams and Stadiums, edited by Roger G. Noll and Andrew Zimbalist, "the state of Maryland spends approximately $14 million a year to attract approximately $3 million a year in job-creation and tax-import benefits." In addition to whatever Baltimore Orioles fans pay to attend games, Maryland citizens, whether they attend games or not, are being forced to pay $11 million a year to keep the team in town.

Even if it were a safe assumption that revenues would be fairly constant over the thirty year period that the stadium would be paid for with public funds, Dr. Fuller may very well overestimate the induced economic impact of having a stadium in Northern Virginia. He makes the well-worn arguments that having a stadium in or near a community will result in increased spending in the community. He neglects to mention that much of this spending is entertainment spending made by consumers that are choosing between competing alternatives. If baseball were not available in the community, these consumers would have spent their entertainment dollars elsewhere in the community. Many of the jobs that are supposedly created by the building of the stadium are, in fact, jobs that are shuffled from other places that would have benefited from entertainment dollars being spent elsewhere. Much of the supposed economic impact of a stadium is also greatly dependent on where it is built. However, a proposed site has not even been selected. Dr. Fuller bases his analysis on hypothetical locations and on assumptions that zoning regulations, land development, and transportation will come together in a favorable manner that will lead to an ideal outcome.

It is interesting to note that one of the prime arguments for building a stadium is that it would induce economic growth. This has led to a competition of sorts between the neighboring areas of Northern Virginia and the District of Columbia to attract a baseball team. Michael Frey, a member of the Fairfax County Board of Supervisors and the chairman of the Virginia Baseball Stadium Authority, states on the authority’s web site that "Since 1971: …Personal income in Northern Virginia -- $68.4 billion in 1998 -- has shot up by 194 percent, when adjusted for inflation, while the District’s $19.3 billion grew by only 8.7 percent." This seems to be an argument that Northern Virginia already has plenty of economic growth without a baseball stadium. It would seem to be a prime argument to locate a new or relocated baseball team in the District of Columbia, which needs economic growth much more keenly than does Northern Virginia, and which already has RFK Stadium available to accommodate a team. RFK stadium is also conveniently located near a Metro station, and would therefore lead to increased ridership of Metro outside of rush hour. This could even mean a decrease in the subsidy to Metro currently paid by Northern Virginia residents.

Throughout the report, Dr. Fuller states that economic benefits of the stadium would be of enough real value to Northern Virginia citizens to justify a large public subsidy, but a closer look at the facts presented and not presented in the report would indicate otherwise. Virginia taxpayers should not be asked to fund a baseball stadium when a large body of evidence, evidently overlooked by Dr. Fuller, shows that it is a poor public investment.

The Fairfax County Taxpayers Alliance Newsletter - Summer 2000

A Commission to Raise Virginia’s State and Local Taxes for the 21st Century?

Virginia taxpayers can expect a new impetus for higher taxes when the Commission to Study Virginia’s State and Local Tax Structure for the 21st Century makes its report on December 1, 2000. Not only will its report be completed just in time for the next General Assembly, it may also frame the issues for next year’s gubernatorial elections.

The Virginia General Assembly established the Commission in February, 1999, through House Joint Resolution No. 578 and Senate Joint Resolution 401. The resolutions’ 19 "whereas" clauses note that "... the local real estate tax was first imposed in 1645 under the reign of England's King Charles I, the personal property tax was enacted in 1654 under Lord Oliver Cromwell, and the Business Professional and Occupational License (BPOL) tax was first imposed on a blacksmith to fund the War of 1812." The clauses also state that the sales tax was established in 1966 and the current income tax was adopted in 1971. Nowhere, however, do the clauses state that during the 1980s these antiquated taxes increased Fairfax County’s per capita revenues 50 percent, when adjusted for inflation.

The joint resolutions charge the commission to "... examine what other states have done to assist their localities with raising revenues paying particular attention to those states in which a local income tax is imposed." There is a caveat that: "The commission is specifically directed to develop revenue-neutral recommendations that will not increase Virginia's per capita state and local tax burden." However, partially replacing a property tax with a new local income tax may be "revenue neutral" when implemented, but it will lead to higher taxes if income continues to increase faster than property values.

The commission consists of 13 members, none of whom are elected officials, who were selected by the General Assembly. One citizen was chosen to represent each of eleven Congressional districts and two were selected at-large. One of three members from Northern Virginia is James W. Dyke, Jr., Esq., recently head of the Fairfax County Chamber of Commerce and a long-time advocate of higher taxes.

"Listed on the commission’s website (www2.institute.virginia.edu/taxstudy) are proposals from the Commission on the Condition and Future of Virginia’s Cities. Two of their proposals are to enable regional sales taxes and to create regional transportation districts with the authority to levy regional taxes for transportation."

Since its appointment in August, 1999, the commission has held seven meetings and four public hearings.

Among the presenters at the public hearings was Delegate Robert D. Hull from Falls Church, who urged the commission to allow Fairfax County to implement a county income tax. Delegate Hull counseled the commission, "... if you feel that additional taxes are needed, then feel free to say that, regardless of the political climate against that idea."

Another presenter was French Slaughter, Chairman, Tax Policy Commission, Virginia Chamber of Commerce. Mr. Slaughter opposed taxing authority for school boards. However, he gave a green light to ‘local taxing authorities’: "Likewise, ‘local option’ taxes are not the optimum means of addressing the problem. Local option taxes can increase the tax compliance burden for businesses. However, if the General Assembly is unwilling or unable to provide adequate funding to alleviate the growing transportation and infrastructure needs of Virginia’s fastest growing localities, then the creation of local taxing authorities may be the only viable alternative."

It appears that the commission is ignoring the real issue, that school and social spending are consuming enormous tax increases without offering any accountability for results.

By Arthur G. Purves

The Fairfax County Taxpayers Alliance Newsletter - Summer 2000

The Northern Virginia 2020 Transportation Plan: A Plan for Higher Taxes and Crowded Highways

Much has been made in the local press about the Northern Virginia 2020 Transportation Plan, which recommends $14 billion in new highway and rail construction and $700 million dollars in new annual taxes.

This is in addition to $16 billion of projects that had already been approved in the current 25-year D.C. metropolitan area "Constrained Long Range Plan".

The 2020 Plan includes the following major projects:



Western Transportation Corridor

$1.6 billion

Eastern Bypass Crossing along US 301 in Md.

$1.0 billion

Widening the beltway to 12 lanes

$2.0 billion

Adding lanes to the 14th Street bridge

$100 million

Adding two lanes to I-66 outside the beltway

$535 million

Metrorail in the Dulles Corridor

$2.0 billion

Metrorail along I-66 from Vienna to Centreville

$657 million

Metrorail along I-95 to Lorton, Potomac Mills

$1.3 billion

Rail along beltway from Dunn Loring to American Legion Bridge

$740 million

Light rail on VA 7 and VA 244 from Tysons to Pentagon

$650 million

Light rail on VA 28 from Manassas to Dulles Int’l Airport

$790 million

Light rail on US 1 from Pentagon to Alexandria

$330 million


$11.702 billion

Annual operation and maintenance costs for rail are estimated to be about $80 million.

The 2020 Plan is unlikely to eliminate crowded roads, primarily because it ignores zoning.

A rail line will never be self-sufficient. However, to minimize taxpayer subsidies there must be frequent rail stations with high-density commercial and residential buildings at each station. Trains must be full in both directions during rush hour. Commuters will ride rail only if they live or work close to it; otherwise road enhancements will divert commuters from rail. Therefore, a new rail line needs to run down the middle of a new city that is as long as the rail line and extends out about half a mile on either side. Rail is justifiable for cities, not suburbs.

For example, if rail were to run down the Dulles Corridor, that corridor would need to become a 16-mile-long Crystal City or Rosslyn. The problem of course is that the Dulles Corridor runs along established residential neighborhoods that would resist high-density zoning.

Zoning is the "third rail" of mass transit and is so controversial that politicians avoid the subject. When the issue arises, high-density zoning seems to lose. The Board of Supervisors defeated plans for high-density zoning around the Vienna Metrorail station, although the builder has recently submitted a new proposal. Former supervisor Bob Dix of Hunter Mill District, through which the Dulles Corridor runs, lost re-election at least in part as a reaction to the high-density development he brought to Reston. At an election forum held in McLean, Kate Hanley, who is the current chairman of the Metro board (officially the Washington Metropolitan Area Transit Authority - WMATA) stated that she was opposed to high-density zoning at the West Falls Church Metro station. That means that for all practical purposes, the chairman of the Metro board is anti-rail.

There is almost no high-density zoning at any Metro station in Fairfax County.

So rail is at in impasse: the county must choose between rail or preserving residential neighborhoods along rail corridors. The supervisors and General Assembly do the public a disservice by conveying the impression that rail will come when they refuse to champion the rezoning that rail requires.

The 2020 Plan’s highways will quickly become congested. Los Angeles has an extensive freeway system, and still is the only city with a worse rush hour than the Washington, D.C., metropolitan area.

The accompanying table itemizes the $700 million per year of new taxes required for the 2020 Transportation Plan.

By Arthur G. Purves




5 cents per gallon gas tax

$40-$45 million

$1 toll pr trip on new highway facility (illustrative example-Tri-County Parkway)

$20-$40 million per facility

1 percent increase in sales tax1/2 percent increase in sales tax

$160-$180 million$80-$90 million

1 percent increase in income tax1/2 percent increase in income tax

$400-$450 million

$200-$225 million



The Fairfax County Taxpayers Alliance Newsletter - Summer 2000


In 1975, Fairfax County’s budget was $214 million. Today its budget is $2.15 billion. If the county’s spending and revenues had increased no faster than population and inflation since 1975, its budget today would have been less than one billion dollars, or less than half of the current budget.

In other words, tax and spending increases over the past 25 years have doubled the size of the current budget and give the county an extra $1.2 billion per year. This is much more than the extra $700 million per year that is needed to implement the Northern Virginia 2020 Transportation Plan.

As the adjacent chart of per-capita (i.e., per resident) revenues shows, the tax increases occurred primarily during the 80s, when property values soared, and have started rising again since 1996.

Contrary to popular belief, personal property taxes (the "car tax") are not being eliminated. The county still assesses all cars at a rate of $4.57 per $100 of book value. County revenues from the car tax are at a new high of $417 million this year. What has changed is that the tax is being paid from soaring state income taxes instead of from personal property tax bills.

Where are the tax increases being spent and why is there not enough money for transportation?

The answer, shown in the pie chart, is that school and social spending absorb 85 percent of county tax and spending increases.

pie chart

As this newsletter has frequently reported, Fairfax County Public Schools spending has increased twice as fast as enrollment and inflation since 1975. This year the schools received a 9.8 percent increase in county funding, which was almost twice as much as was required to keep up with enrollment and inflation.

The Community Services Board received a 12 percent funding increase. The board provides mental health, mental retardation, and substance abuse services.

The county’s Health and Welfare Agency got a 14 percent funding increase, more than three times what was required to keep up with population and inflation. To fund transportation and cut taxes, the county must control school and social spending.

By Arthur G. Purves

The Fairfax County Taxpayers Alliance Newsletter - Summer 2000


In 1979, the Virginia state budget was $4.783 billion. By 1999 its budget was at $21 billion. If the state’s spending and revenues had increased no faster than population and inflation since 1979, its 1999 budget would have been $12.5 billion, or $8.5 billion less than the 1999 budget.

In other words, tax and spending increases over 20 years have almost doubled the size of Virginia’s budget and give the state an extra $8.5 billion per year. This is substantially more than the extra $700 million per year that is needed to implement the Northern Virginia 2020 Transportation Plan.

As the above chart of per-capita (i.e., per resident) revenues shows, the tax increases have occurred every year since 1983 except for 1990..

So if twenty years of tax increases now give the state of Virginia an extra $8 billion per year, why is there not enough money for transportation?

As is the case with Fairfax County, school and social spending drives the tax increases and diverts funds away from transportation. In the case of Virginia, spending increases (above what was required to keep up with population and inflation) for public schools, public colleges and universities, administration of justice, and individual and family services account for 70% of the tax increases.

As of 1999, transportation had received only four percent of the tax increases.

Unlike Fairfax County, which is doing nothing to examine the long-term trends in county spending, the state of Virginia has published a report (not available on the Internet) called "Trends in Virginia Government." It studies spending trends since 1950. The report was updated in 1986 and 1990 but, unfortunately, has not been updated since.

Among the major causes of social spending increases are the increase in the prison population and the cost of Medicaid.

Even after the enormous increases in public education funding, forty percent of freshmen at Virginia public four-year colleges do not graduate.

Rather than demand higher taxes, government must bring school and social spending under control so that their funding never increases faster than population and inflation.

By Arthur G. Purves


The Fairfax County Taxpayers Alliance Newsletter - Summer 2000

ROBERT DRESDNER, a Fairfax County resident, taxpayer, and parent wrote the following in an e-mail to Arthur Purves, FCTA president: Reprinted with permission.


Thanks for speaking out "again" against property reassessments and increasing taxation at the recent hearing in the Fairfax County (FC) "cavernous" atrium. From the TV, it appeared that you were the only participant to question the taxation treadmill- was that the case?

I wonder what portion of the schools overall budget (time, planning, energies and money) is plowed into teaching the basics (RRR) vs. multilingual and remedial resources, computer literacy classes and psychologists. What portion of the budget is spent on new books and libraries vs. computer resources? First things first: my kids don't need to learn "keyboard skills" at this stage, and I don't want my taxes spent on such nonsense. They can pick up such "skills" anywhere. They need to first develop and advance their RRR skills. Our sense is that the public schools have been tempted away from the basics, they have lost focus, distracted by the latter trendy demands.

The option is to bail, so we are; we are taking them out next year and at significant extra expense, sending them to a private school. It's farther away and obviously hard to lose friends, but at least this will give them a real chance. Children in their new school test 2 grades ahead of their public school peers. How do they do it? By skipping all the post modern B.S. that seems to be consuming FC, they find they have more time to do the basics [RRR].

Pity taxes virtually discredit, deter, and penalize private education. We naturally would prefer that our FC [state] taxes fairly reflected (rather than unconstitutionally discriminated against) our parental responsibility to educate our children. The PTA should ask the FC Supers and state reps why do they tolerate VA tax rules that deter taxpayers from exercising their constitutional right to opt for a private or parochial education? Tax credits should be provided to allow parents to leave the FC school system so that those that want to exercise their choice to educate their children are not penalized by be required to pay double, i.e., for both a public and a private/parochial education. Where is FCTA and the FC Supers on the private charter schools and tax credit issues?

The Fairfax County Taxpayers Alliance Newsletter - Summer 2000

Ludwig Benner, one of our FCTA board members, sent the following information that shows builders and developers are being taxed at a lower rate than most other classifications. Ludwig wonders, "Why the disparity?"

Rates per $100 of gross receipts for business grossing more than $100,000

 1, Professional services, BPOL license tax rate  $0.31 
 2, Specialized occupations, BPOL license tax rate  $0.31 
 3, Real Estate brokers, BPOL license tax rate  $0.31 
 4, Research and Development companies, BPOL license tax rate  $0.31 
 5, Amusements, BPOL license tax  $0.26 
 6, Hotels and Motels, BPOL license tax rate  $0.26 
 7, Renting by owners, (>4 units) BPOL license tax rate  $0.26 
 8, Telephone companies, BPOL license tax rate  $0.24 
 9, Heat, light, and power companies, BPOL license tax rate  $0.24 
10. Business service occupations, BPOL license tax rate  $0.19 
11. Personal Service occupations, BPOL license tax rate  $0.19 
12. Repair services, BPOL license tax rate  $0.19 
13. Money lenders, BPOL license tax rate  $0.19 
14. Retail merchants, BPOL license tax rate  $0.17 
15. Contractors, BPOL license tax rate  $0.11 
16. Builders, Developers, BPOL license tax rate  $0.05 
17. Wholesale merchants, BPOL license tax rate  $0.04 
18. Research and Development Fed. Contractors, BPOL license tax rate $0.04 

( Source is the County Code, Section 4.7)

The Fairfax County Taxpayers Alliance Newsletter - Summer 2000


Plan now to attend!