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.
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:
Project
|
Cost
|
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
|
TOTAL
|
$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
RATE/SOURCE
|
NORTHERN VIRGINIA REVENUES (PER YEAR)
|
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
|
TAX INCREASES ADVOCATED BY THE NORTHERN VIRGINIA 2020 TRANSPORTATION PLAN
|
The Fairfax County Taxpayers Alliance Newsletter - Summer 2000
ANNUAL REVENUES FROM FAIRFAX COUNTY TAX
INCREASES SINCE 1975 NOW EXCEED $1 BILLION
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. |

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
ANNUAL REVENUES FROM VIRGINIA TAX INCREASES SINCE 1979 NOW EXCEED $8 BILLION
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.
Arthur,
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 LIEUTENANT
GOVERNOR CANDIDATE JEANNEMARIE DEVLOLITES TO SPEAK AT FCTA ANNUAL
MEMBERSHIP MEETING, TUESDAY, OCT. 3, 7:30 - 9:00 PM. Plan now to attend! |