Madam Chairman and Members of the Board:

My name is Arthur Purves.  I address you as president of the Fairfax County Taxpayers Alliance.

Between 2000 and 2007, the Fairfax County Board of Supervisors used higher residential assessments to justify doubling the typical homeowner’s real estate taxes from $2400 to $4800.  Since 2007 the supervisors have kept taxes at the $4800 level.

If real estate taxes had increased at the same rate as inflation since 2000, the typical homeowner’s taxes today would be $3300 instead or $4800. The real estate tax rate would be 76 cents instead of the $1.105 recommended by the county executive.  The board has levied a $1500 real estate tax hike on homeowners - an extraordinary amount.

The justification for higher taxes was that because homes were worth more, taxpayers could pay more.  However, since 2007, the average Fairfax County inflation-adjusted residential assessment has decreased 30 percent.  Last year’s assessment decrease was 15 percent. But the Board of Supervisors, including all the three Republicans, unanimously voted a year ago for the largest real-estate tax-rate increase in 30 years, from 94 cents to $1.05, to keep taxes near $4800.  Now the county executive is recommending another tax-rate increase, to $1.105, to offset this year’s decrease in assessments.

Since each penny of the real estate tax rate gives the county $18.7 million in revenue, setting the rate at $1.105 instead of 76 cents gives the county an extra $645 million.

Since FY2000, Fairfax County Public Schools inflation-adjusted spending has increased $597 million (from $1.888 billion to $2,485 billion), which is $343 million more than needed to keep up with enrollment and inflation.

Why then are the county and schools laying off employees and cutting programs?

Part of the answer is the county’s generous salary increases during the housing bubble.  According to county staff’s answer to a budget question by Supervisor John Cook, between FY2001 and FY2009, county compensation increases outpaced inflation by 22 percent, compared to seven percent for the private sector.

The main reason for the current budget crisis is the soaring cost of pensions and health insurance.  Since FY2000, while county population increased ten percent, county government inflation-adjusted spending for employee benefits increased 112 percent.

Likewise, since FY2000, while Fairfax County Public Schools enrollment increased 13 percent, school inflation-adjusted school spending for employee benefits increased 94 percent.

 Between FY2000 and next year, county government and school spending on employee benefits will have increased from  $379 million to just over $1 billion, an inflation-adjusted increase of $521 million.

 That is why Churchill Elementary School’s class size has increased from 27 to 34 and why there is a $100 fee for participation is school sports.

 According to the Bureau of Labor Statistics (BLS), state and local government employees now earn more than private-sector workers (DC Examiner, March 30, 2010, “Good times for government workers as pay outpaces private sector”).

 According to a July 28, 2009, BLS press release half of private-sector workers and 73 percent of state and local government workers have employer-provided health insurance.  Likewise 51 percent of private-sector employees but 86 percent of state and local government employees have employer-provided retirement plans.

 Moreover, while the county retirement is pensions, private employers have replaced pensions with 401Ks.

 In short, homeowners are paying an extra $1500 in taxes so county employees can be better compensated than the taxpayers who fund them.

The county should do as private industry has done:  replace pensions with 401Ks.  Currently taxpayers are paying the employee and employer share of Virginia Retirement System pensions.  Employees should pay the employee share, which would save the taxpayers $60 million.

Regarding health insurance, do what Medicare and Medicaid and private insurance should have done:  increase co-pays and deductibles and limit benefits to catastrophic coverage rather than maintenance.  A major cause of medical inflation is that since 1960, the consumer’s out-of-pocket costs for healthcare has decreased from 47 percent to 12 percent in 2006.

Reverse the $1500 tax hike.  Control pension and healthcare spending and reduce the tax rate back to 76 cents.

Thank you.