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July 31, 2004

Arlington County Board Takes From Peter, Gives to Paul (Sin Tax to Syntax)

Earlier this month (both July 7 and July 11), we growled about about the County Board approving an increase in the cigarette tax, chiding the Board about its 300% increase in the cigarette tax for smokers so they could lower the real estate tax for residential and commercial property owners. We weren't against lowering the real estate tax rate, but we think it should come at the expense of the ever-increasing size of county government. According to this week's Arlington Sun-Gazette, the county will be keeping all the revenue generated by the 300% increase in the cigarette tax. However, it's taken the grand poohbahs at the Courthouse two weeks to figure out that none of the county's windfall will be going to the schools even though the County Board and the School Board had a revenue-sharing agreement in place whereby the Schools got almost 49% of all local taxes. Now here comes the 'syntax' part. When asked his opinion of the Schools being left out of sharing any of the cigarette tax, Superintendent Robert Smith said, "Any revenue that comes in will be used to cut the real estate tax rate, so county revenues won't go down by the tax-rate cut, Smith said. "Therefore, the county will see the same revenues while cutting the tax rate -- the school system will get the same cut we would have gotten if there were no cigarette tax or rate cut." Sounds perfectly clear to us!

July 29, 2004

Government Poohbahs Seem Unaware of Huge Federal Deficit

Yesterday, I growled about officials in the Department of Veterans Affairs who bollixed a computer system at the VA hospital in Bay Pines, Florida. Today's example of government in action, however, comes in the form of corporate welfare courtesy of the five members of the Federal Communications Commission (FCC). They received the Porkers of the Month award from Citizens Against Government Waste for approving "a plan to swap airwave spectrum with Nextel Communications at a below-market price. According to CAGW, "Nextel is trading its fragmented, non-nationwide spectrum . . . worth $1.2 billion, in exchange for prime nationwide spectrum . . . estimated to be worth as much as $7 billion." CAGW concludes, "In a time of record budget deficits, the FCC is clueless as to how much money an auction would bring in for taxpayers."

July 28, 2004

Good Thing Government is Awash in Money

According to an Associated Press story in today's Washington Post, the Department of Veterans Affairs "is scrapping a hospitals' troubled new computer system because of problems that have delayed surgeries, prompted congressional investigations and led to the resignation of several top officials." The system was part of a pilot project at the VA hospital in Bay Pines, Florida. If fully implemented throughout the entire Department of Veterans Affairs, the full cost would have been $472 million.

July 27, 2004

Need, Greed and Class Conflict

You know that liberals are reaching into your pocket when they begin talking about unmet needs. When taxpayers balk at being plundered once again, the liberal spendthrifts complain that conservatives are greedy. Gary Galles, an economics professor at Pepperdine University, puts it nicely in this paper, "The greed of the fatcats is nicely contrasted with the 'need' of the middle-class and the poor." Then, he adds, "And so with these two little words we recreate a Marxian-style drama of class conflict based on human motivation." In his screed on the subject, Galles writes, "The problem with using need in any analytical sense is that it assumes away an essential aspect of economics -- the fact that in a world of scarcity, choice is unavoidable . . . calling something a need adds nothing but confusion to the analysis."

July 26, 2004

The Pesky State Surplus That Won't Go Away

In an editorial today, the Richmond Times-Displatch writes, "Delegate Kirk Cox showed typical bluntness in his reaction to news that Virginia has a surplus of $324 million -- before new state taxes take effect. Speaking of Finance Secretary John Bennett, who is universally respected for his facility with numbers, Cox noted Bennett, "who recently won an award, missed [revenue] prediction by 42 or 45 percent. It's either incompetence or they misled us." Harsh words by Delegate Cox (R)? Afterall, Finance Secretary Bennett works for Governor Mark Warner (D). The editorial admits the words may be harsh, but then says, "Budget predictions should be conservative, but not so conservative that they veer off course. And there is the fact that anticipated budget growth above a certain point would have triggered the next step in the car-tax cut, before the Assembly froze the rollback at the current level." Seems Virginia taxpayers are owed an honest explanation.

July 25, 2004

Were Virginia's 'Girlie Men' Opportunistic or Courageous?

Three days ago, we compared the 17 GOP members of the Virginia House of Delegates who sided with Governor Mark Warner (D) to pass the largest tax increase in Virginia history to some Democratic members of California's General Assembly who are opposing Governor Arnold Schwarzenegger. Their reward is a healthy dose of campaign contributions as reported in both the Washington Post and the Lynchburg News & Advance. The Post called the 17 "moderates . . . who led a rebellion against their party leadership" and pointed out they were among the top fundraisers in a recent analysis of campaign fundraising. The News & Advance, on the other hand, referred to them as 'so-called renegades.

The News & Advance, however, quoted the executive director of one of the campaign contributors saying the legislators "showed a lot of courage." Was it courage, though, or were the legislators being opportunistic? In an op-ed in Sunday's Newport News Daily Press, Pat McSweeney, former chairman of the Republic Party of Virginia, writes that "circumstances suggest" two of the delegates "may have been more opportunistic than courageous," adding "What is particularly disturbing is that (Delegate Chris) Jones and (Delegate Preston) Bryant met privately with Gov. Mark Warner to plot the legislative maneuvers that led to the passage of the tax hike. The private meetings themselves may not raise a red flag, but what Jones and Bryant failed to pursue in those meetings certainly does."

Incidentally, the News & Advance documents in detail the support provided by one of the organizations, Associated General Contractors of Virginia, who lobbies the General Assembly. The AGC website even identifies the 16 GOP legislators who "sided with Democrats to pass a budget and end the (budget impasse." AGC added that "A 17th Delegate, Vince Callahan (McLean). voted for the original compromise budget in the House but later opposed the Senate-amended version."

July 22, 2004

Virginia's Own 'Girlie Men' -- all 17 of them

California Governor Arnold Schwarzenegger (R) made the news last weekend when he referred to Democratic legislators who have been opposing his budget as 'girlie men.' According to Sunday's Sacramento Bee, Schwarzenegger drew howls of laughter from a large crowd when he said spendthrift legislators should tell the public, "I don't want to represent you, I want to represent those special interests, the unions, the trial lawyers, and I want them to make the millions of dollars -- if they don't have the guts, I call them 'girlie men' -- a reference to a Saturday Night Live skit that poked fun at the Governor when he was a body builder. The story seems to have traveled around the world, or at least to South Africa, where TV News24 reported that one Democrat, Assembly Speaker Fabian Nunez "said such statements were below the dignity of the governor." One letter writer in the San Jose MercuryNews suggested that "Legislators who are unwilling to look at increased fees or new taxes are also not willing to offend their constituents." In a column posted at Townhall.com, Ben Shapiro, a young writer, wrote, "Democrats were more than upset -- they were mortally offended. Unconfirmed reports stated that many could be seen angrily slapping staffers with their handbags following the incident."

So, how does this relate to Virginia? In the recently concluded first special session of the 2004 General Assembly, a resolution to the Fiscal Year 2005-2006 budget was at an impasse because the Senate had voted for a 'gargantuan' tax increase (a description which it's chief sponsor, Senator John Chichester (R), even acknowledged as descriptive) since it was several times greater than even the tax increases proposed by Governor Mark Warner (D) while the House of Delegates had agreed to some rather minor 'revenue enhancements.' However, as the days wore on, and the glare of the press got hotter, Governor Warner peeled off 17 Republican delegates in the House, and talked them into voting for what eventually became the largest tax increase in Virginia's history.

Some California political types, both Democrats and Republicans, are taking advantage of the marketing opporunities by selling t-shirts over the Internet, according to Reuters. We also thank Virginia News Source for running this particular blog entry at their website.

July 21, 2004

Remember the State Bonds Virginians Approved Two Years Ago? They were not enough!

Back in November 2002, Virginia voters approved bonds that included $846 million for construction at Virginia's colleges and universities. Last week, NewsChannel8 reported that "projects are more expensive than school officials had anticipated." Worst hit are community colleges where "seven out of nine projects that have gone to bid since January are over budget by six percent to 50 percent or more, with only two or three bidders each." Just asking, but is it possible that the government officials at some of those schools did a lousy job of estimating costs in the first place?

July 20, 2004

Richmond's Iron Triangle

Three days before leaving the White House in 1961, President Dwight Eisenhower said Americans "must never let the weight" of the military-industrial complex "endanger our liberties or democratic processes" and that "Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together."

Now comes Paul Goldman warning about the dangers of Richmond's Iron Triangle, which he defines as the interdependence "between lobbyists, elected officials, and alledgedly fearless political commentators and members of the media." In his June 9, 2003 column for Bacon's Rebellion, he takes University of Virgnia government professor and frequent guest on cable talkshows, Larry Sabato, to task for being part of the Iron Triangle. According to Goldman, "Sabato persuaded our elected officials to give him over $400,000 in the 2003 General Assembly session for some pet projects." Then, writes Goldman, "Mr. Sabato went to Fredericksburg to give his take on the June 10th GOP primary contest between Senate Finance Chairman John Chairman John Chichester and his election oppornent, Mike Rothfeld."

What's wrong, you ask? In Goldman's words, "the cynicism of too many of Virginia's political elite is the drug causing much of the apathy and lack of leadership plaguing our state's political system."

By the way, Bacon's Rebellion, published by Jim Bacon, provides a good source for commentary on the Virginia business and political scene, or as Jim calls it, the op-ed page for Virginia's new economy.

July 19, 2004

JFK on Taxes

No, no, not John F. Kerry, the current Democratic candidate for president, but John F. Kennedy (D) made many statements on taxes. Many, if not most, of them can be taken to heart by today's anti-taxers. Today's WorldNetDaily contains a list of them which come from the book, "The Interesting History of Income Tax," written by William Federer. (information on purchasing the book is available at the WND link) In a September 18, 1963 radio and television address on his tax-cut bill, he said the following:

"A tax cut means higher family income and higher business profits and a balanced federal budget. Every taxpayer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investment. Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business, and as the national income grows, the federal government will ultimately end up with more revenues."

July 18, 2004

A Promise to Raise Your Taxes

The July 6, 2004 issue of Insight magazine reports that Senator Hillary Rodham Clinton (D) has promised to raise your taxes. At a fund-raiser for California's Senator Barbara Boxer (D), the magazine reported that Senator Clinton "declared that Democrats mean to raise taxes on the American people by repealing the Bush tax cuts," specifically quoting Senator Clinton saying, "We're saying that for America to get back on track, we're probably going to cut that short and not give it to you. We're going to take things away from you on behalf of the common good." As the magazine noted, "Can't get plainer than that."

July 16, 2004

The Arlington County Board Wants More of Your Money

When the Board approved the Fiscal Year 2005 budget in April, it included a 14.6% increase in average residential property taxes. That wasn't enough for the county's appetite for more of your money. On Saturday, July 10, they voted to put $208 million before the voters of Arlington in four bond referenda (Manager's June 24 report and July 8 'supplemental ' report -- both require Adobe Acrobat) . This includes:

- $75.4 million for local parks and recreation
- 45.9 million for transportation and infrastructure
- 18.5 million for Metro
- 78.1 million for Arlington Public Schools

Sunday's Washington Post reported the November bond question will be the largest bond question in county history. A major problem with the way the Board chose to 'package' the four bonds is that the largest issue on the county side is the proposed park facility at North Tract because the cost estimates are based on various estimates, and not on solid engineering work. Even worse, there is virtually no discussion of North Tract in either the Manager's June 24 report or in the supplemental report. If voters approve the parks and recreation referendus, the Board will literally be getting a blank check for more than $75 million. The issue with the cost estimates is covered well in the Washington Post article.

On June 11, we noted that the Arlington poohbahs were backpeddling on the Westover library for which voters had approved $4 million in bonds back in 1998 with completion promised by 2000. The library is now overbudget, and the Schools are reevaluating their participation.

For more details about the give 'n take during the Board's discussion, and about the the bonds, please read the stories in the Arlington Sun-Gazette and the Arlington Connection.

July 14, 2004

More Billions of Taxpayer Money Goes Down the Rathole

According to today's edition of The Hill, a newspaper focusing on the workings of the U.S. Congress, "A new report shows that the Social Security Administration has made more than $3 billion in improper payments and only successfully determined who had been overpaid in about 60% of the cases." Senator Charles Grassley, Finance Committee Chairman, called the report's findings 'astonishing."

July 13, 2004

Liberal Editorial Finds More Cases of Government 'Underfunding'

On June 25, ElGrowlerGrande pointed to a Richmond Times-Dispatch article that had reported that Senator John Chichester (R), the primary architect of the largest tax increase in Virginia history, had signaled that a tax hike would be likely in the 2005 General Assembly in order to 'fund' the Commonwealth's transportation needs. Now comes the Roanoke Times. In a July 12 editorial, the paper writes that while the "next big budget battle will be over transportation," there is "more work" needed in other areas; they cite higher education as a "glaring example." Even though the General Assembly provided an additional $275 million for higher education in the biennial budget that started July 1, the paper claims Virginia's colleges and universities are underfunded (a variant of unmet needs!) by millions of dollars. Unfortunately, the paper seems to arrive at that figure by comparing the state's per capita support to the national average.

July 12, 2004

General Assembly's Huge Tax Increase Gets Slammed, Again

Just weeks after the 2004 Virginia General Assembly passed a $1.4 billion tax increase, there was news that an improving economy would provide a windfall for the state, which could have reduced the need for the tax hike being so large. Now comes news from the Federal Deposit Insurance Corporation (FDIC). In its Summer 2004 'state profile' for Virginia (requires Adobe Acrobat), the federal bank insurance giant says "tax collections are beginning to recover from large percentage decreases in 2002" but added, "Higher taxes could create a drag on the state's economic recovery." Shouldn't the legislators have know this? One would think so unless some of the legislators were more interested in satisfying special interests.

July 11, 2004

Arlington County Board 'Takes From Peter, Gives to Paul'

As expected, at their meeting on Saturday, the Board voted to hike the local cigarette tax by 300%, from a nickel per pack to 20 cents a pack, reports today's Washington Post. Not to be outdone, the Fairfax County Board of Supervisors will vote on Monday to hike their own local cigarette tax by that same amount. Last week, we suggested the Board is doing nothing but putting meaning into the socialist phrase 'redistribution of income.' According to the Post, the county's finance director said "the cigarette tax would help the country diversity its tax base" because "(l)ocal governments are limited on the taxes they can raise." The Board also promised that the cigarette taxes would be used to reduced the real estate property tax, which they estimated would be equivalent to a $0.007 cent reduction in the tax rate. We'd give you the link to the Board report for this agenda item, but the just redesigned their website, and the links for the report are not available at this time.

July 10, 2004

Democracy in Virginia: Arlington vs. Rest of Virginia

Yesterday's Richmond Times-Dispatch reported that voters in two greater Richmond area counties (Henrico and Hanover) will be soon be voting on whether to adopt the so-called meals tax. Henrico voters will vote on the tax in March, along with voting on a bond referendum. In the meantime, Hanover voters will vote on whether to adopt the tax in November. The 'operative words' are that voters in those two counties, and elsewhere in Virginia, will have an opportunity to vote on whether to adopt the tax.

When the General Assembly gave local governments authority to adopt the meals tax more than 10 years ago, they did so with the proviso that adoption required approval by the voters in a referendum. For Arlington County, however, the General Assembly said the meals tax could be implemented without voter approval if the tax received a unanimous vote of the County Board. Of course, the General Assembly didn't single out Arlington County directly, but stipulated the referendum could be avoided for those counties which had adopted the 'County Manager Plan' of government. How many Virginia counties do you think have the 'County Manager Plan' of government?

July 09, 2004

Pension Fund Manager Put on Leave

Today's Washington Post reports that "(t)he administrator of Arlington County's retirement fund was placed on indefinite leve yesterday, after a county audit found, "irregularities" in his expense report, including unauthorized trips to Delaware and a $200 charge for a spa day at an Arizona resort." The Post further reported the manager "said he had 'screwed up' when he charged an estimated $200 on his hotel bill for an afternoon of massage and yoga at the Center for Well-Being spa at the Phoenician, a luxury resort at the base of Camelback Mountain in Scottsdale" while attending an investment conference. Unfortunately, he didn't think he should absorb the cost as a personal expense since he told the Post he should have had "one of the fund managers hosting the event pick up the tab." The paper notes that Arlington's Comptroller is continuing an audit of 12 months of credit card statements. Unreported is when the previous audit of the pension fund was performed, what was found during the previous audit, and what internal controls exist to prevent similar 'irregularities' from occuring.

July 08, 2004

Legislators raised taxes 'for the children.' Yeah, right!

Educators like to tell us that additional tax money is needed to improve kids education. That may be true, but it also sure helps to pay for the hefty salary increases two Virginia school board members voted for themselves this year. On June 19, the Arlington Public Schools issued a press release touting the School Board's approval of 50% increases in their salaries. Now comes news from Chesapeake, Virginia that the Suffolk School Board voted on Tuesday to increase their own salaries by 100%, reports the July 7 Virginian Pilot.

According to the Pilot, the increases resulted from a recent change in Virginia law which allows school board salaries up to the limit of the local government. See also the applicable section of the Code of Virginia.

July 07, 2004

Arlington County Board Puts Meaning into 'Redistribution of Income'

At their June 26, 2004 meeting, the County Board (requires Adobe Reader) defined the phrase 'redistribution of income' when they advertised a public hearing for their July 10 meeting. In essence, the Board will approve increasing the taxes on cigarette smokers, and use the money to reduce real estate property taxes. Or at least that's the promise. In years past, Arlington has not been successful in getting the General Assembly to 'equalize' the cigarette tax imposed by counties (5 cents) and cities (10 cents), However, during the wrangling over this year's state budget, and the huge state tax increase, localities were allowed to raise their cigarette taxes as high as the state tax on cigarettes. The Board chairman, Barbara Favola, was quoted in the June 23-29 Arlington Connection saying the money would be used to "establish a real estate tax reduction fund" although she reiterated there is no guarantee of a reduction in property taxes. The ACTA president noted that while reduced property taxes were good news, there needs to be a reduction in the size of Arlington's government. The July 1 Arlington Sun-Gazette also noted that the tax is likely to increase even further next year when the state tax rate is scheduled to rise.

July 06, 2004

Who Really Pays Federal Income Taxes?

In April of this year, Congress' Joint Economic Committee (JEC) released a report (requires Adobe Reader) showing that those in the top quintile , i.e., those who earned 46% of all income earned, paid 83% of federal income taxes. On the other hand, households in the two lowest quintiles (i.e., 40% of all households) paid no incomes taxes. Because of refundable tax credits such as the EITC and the child credit, those in the lowest quintile received refunds larger than their tax liabilities. These numbers use 2001 IRS tax data.

In their analysis of the same IRS data, the National Taxpayers Union provides additional detail on who is in the various quintiles. For example, households with the top 1% of Adjusted Gross Income (AGI) had incomes above $292,913, and paid 33.89% of Federal income taxes. Householdsl with the top 25% of AGI, i.e., those with AGI's above $56,085, paid almost 83% of Federal income taxes.

The JEC emphasized that such a highly progressive system "means that federal revlenues devoted to general government operations are particular sensitive to changes in the income of the top earners." Also, see my June 30 entry where I describe the Tax Foundation's more detailed picture of the 40% of non-filers.

July 05, 2004

Repeat After Me: Tax Cuts Not Primarily Responsible for Large Deficits

Advocates of bigger government repeatedly urge repeal of the three federal tax cuts enacted in 2001, 2002, and 2003, saying the tax cuts have been the primary cause of the current federal deficits. They bolster their argument by pointing out that in 2001 the the Congressional Budget Office (CBO) projected a cumulative surplus of $5.6 trillion for fiscal years 2002-2011, but now estimates a $2.9 trillion deficit for the same period, and blame the tax cuts for the deficit. Not so says Congress' Joint Economic Committee (JEC) in a report dated June 1, 2004. (Requires Adobe Reader).

According to the JEC, the tax cuts account for only 24% of the change in projections. The major cause for reducing the suplus was a weak economy. In addition, the JEC attributes increased spending to a 36% reduction in the surplus. They also emphasize that "Deficits would have occurred even in the absence of the tax cuts."

July 04, 2004

Lot Coverage, Seattle Style, Still Affects Property Rights

Three years ago, the Arlington County Board was on course to approve a zoning ordinance that would reduce lot coverage from the current 56%. Because of community concerns that reducing the size of homes that could be built would negatively impact property values, the County Board put off further consideration. The issue of property rights has now become an issue in King County, Washington, where a central feature of a proposed ordinance from the county executive "is that each rural residential landowner must leave 65 percent of his or her land in a natural state, with no more than 10 percent of the land covered by impervious surface," according to a column in the June 4, 2004 Seattle Times.

One state senator, writing in the May 18 Seattle Times, offers an alternative approach involving a bond referendum. Voters could decide if buying and setting aside large tracts of land was an important community priority. According to a FoxNews story on July 1, "Most of the residents who will be directly affected . . . are fuming." One resident was blunt about it, saying, "My take is it's stealing -- out and out stealing." In commenting on the FoxNews story, the Cato Institute wrote that Congress should "enact legislation that specifies the Constitutional rights of property owners under the Fifth Amendment's Just Compensation Claus."