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January 30, 2007

Coalition Urges Reform of Virginia Property Taxation

On January 9, ACTA joined with the National Taxpayers Union and other groups throughout Virginia in this letter asking the Virginia General Assembly to:

reform the way property is taxed in Virginia. As the ballooning assessments and soaring property tax bills of recent years have demonstrated, the existing “current market value” system can create uncertainty and hardship for Virginia’s taxpayers.

While the average 2007 residential assessment in Arlington County dropped 0.8%, the increases from 2000 to 2006 provided enormous windfalls in revenues for Arlington local county government as well as many other Virginia jurisdictions. For example, from 2000 to 2006, Arlington’s average residential tax payment increased 114% even though taxpayers’ incomes increased only 22%. As NTU wrote in their letter, “Taxpayers deserve a more rational approach” than the present system of using “current (or fair) market value.”

Delegate Jeff Frederick (R-Prince William) has patroned House Joint Resolution 559 that would limit annual increases in assessments of real property by “one percent plus the percentage increase, if any, in the rate of inflation. Increases in the rate of taxation on real property are limited to one percent per year.”

Background on the “acquisition value-based property tax system” and other issues that would increase Virginians freedom and prosperity is available from Tertium Quid.

January 28, 2007

County Board Tweaks the 'Share the Loot' Formula

The online Arlington Sun-Gazette yesterday reported the Arlington County Board “ratified an agreement with the School Board to slightly adjust the funding formula that governs how much tax money is sent to the school system.” The percentage going to the schools for fiscal year 2008 will go to 47.8% from its current 47.7%. According to the Manager’s report to the Board (agenda item 26 and attachments):

“County and School staff have modified the Revenue Sharing Agreement to reflect minor, non-substantive changes and provide more details on tax revenue exclusions consistent with the budget approved for FY 2007.”

When first conceived several years ago, the schools were to receive a share of tax revenues, but over time, the County Board has excluded portions or all of the recordation tax, commercial utility tax, personal property tax, communications tax, and the real estate tax that pays for the “cha ching” homeowner grants. So by excluding another tax, the formula requires increasing the percentage. Sounds Rube Goldbergesque to us!

Tweaking the formula also affects the current FY 2007 budget, and consequently, the County Board will provide the school district a windfall for FY 2007 of almost $327,000 for 40 additional students. How does that work? The formula assumes those students need a share of assistant principals, guidance counselors, librarians, clerical staff, etc., whose salaries are “sensitive” to enrollment. Common sense, however, tells you that even if all 40 students attended just one school, the most additional personnel that would be needed is about two teachers, perhaps an additional $125,000. Since those 40 additional students are likely spread over the entire district, the additional $327,000 is nothing more than a windfall for the bureaucrats at the Ed Center.

The bottom line is the so-called revenue sharing agreement is nothing more than a way for the local government to share the loot plundered from hardworking taxpayers without any accountability. If the County Board required improved test scores such as SOLs or SAT, or closing of the minority achievement gap, or reductions in the time students spend in ESOL classes, we could understand the incentives. But hey, we just pay the taxes.

January 25, 2007

The Impossible Task: Projects On Time, and Within Budget

Arlington County government seems to have difficulty completing capital improvement projects on-time and within budget. The January 24-30 issue of the Arlington Connection reports a $100 million increase (roughly 25%) in the cost of the sewage treatment plant. There’s also North Tract, fire stations in Cherrydale and Aurora Hills, libraries in Westover and Shirlington, Washington-Lee High School, and a number of neighborhood conservation projects.

The Connection reports:

“After putting the contract out to bid on three separate occasions, the lowest estimate from construction firms was north of $500 million. County officials did not want to disclose the precise figure because they may seek a fourth estimate.”

County officials may be correct about “the higher prices of construction materials for the expected cost increases” and that “competition with the private sector for the best contractors and a tight labor market” are other factors. Unfortunately, the problem of low initial estimates seems to cut across all county CIP activities. The result is the County Board makes more promises than Arlington taxpayers should reasonably expect to pay for.

January 18, 2007

The Circus of the Global Warming Alarmists Continues

Hot rod drivers talk about how fast it takes to go from a standing start to 60 mph. Well, Paul Ferguson, chairman of the Arlington County Board, just set a new speed record for politicians. We predicted here on New Year’s Day that his environmental initiative on global warming would be the main feature coming out of the Board’s so-called organizational meeting. Later that week, the Washington Post featured him in two stories. Then this Tuesday, there was this ‘puff piece’ from the Washington Post saying Ferguson had achieved his ‘moment of glory.’ And now this Arlington County news release this afternoon proves that Ferguson has broken all political records by appearing at a news conference with the U.S. Senate Majority Leader, Harry Reid. And just 18 days later.

As we growled on January 6, we are skeptical about the science underpinning global warming, citing a number of respected sources.

While the global warming alarmists like to think there is ‘consensus’ about global warming, there is not. What are some skeptics actually saying? Let’s take a look:

A scientist writes at the American Thinker that as a scientist he never says never, but then immediately adds “human-caused global warming is always a hypothesis to hold, at least until climate science becomes mature. (Climate science is very immature right now. Physicists just don’t know how to deal with hypercomplex systems like earth weather . . . .).”

Robert Bradley wrote in Wednesday's Washington Times: "Nowhere is caution against an open-ended regime of tax-spend-regulate more necessary than with climate-change policy. The emotional, politicized debate over global warming has produced a fire-ready-aim mentality, despite great and still growing scientific uncertainty about the problem."

Even the U.S. Environmental Protection Agency, at their climate change website, acknowledges that while some things are known about climate change, there are many things that are not certain: For example, they note:

“Important scientific questions remain about how much warming will occur, how fast it will occur, and how the warming will affect the rest of the climate system including precipitation patters and storms.”

Yet one of the events the New York Times cites as having moved the global warming spotlight onto Congress is "forsynthias blooming in lawmakers' gardens in January." So the Circus of the Global Warming Alarmists continues. Unfortunately, Arlington taxpayers will feel their wallets becoming lighter as a result of the County Board chairman's global warming initiative.

We’ll keep you updated with news of what other skeptics are saying.

January 17, 2007

When Bad News Isn’t Really Bad

If Arlington taxpayers didn't receive their 2007 assessment notices in the mail yesterday, they probably got the news this morning with stories in both the Arlington Sun-Gazette and the Washington Post. In our opinion, however, the Sun-Gazette presents a more accurate picture of the situation than does the Post by reporting in the lead two paragraphs:

Arlington County's heavy concentration of commercial property appears to have insulated the county government from the worst effects of the softening real estate market, according to new property-assessment figures released Jan. 16.

"While average residential assessments declined from the year before - they are down 0.8 percent - commercial assessments rose 13.7 percent compared to 2006, according to preliminary figures released by the county government.”

Even the county’s press release got it right in their title: “Arlington Real Estate Assessments Up 6.7 Percent Overall for 2007: Commercial growth continues while residential real estate values moderate.” The Post chose to emphasize, instead. that home values in Arlington decreased by 1%. The difference is important because with the 6.7% increase in overall property values, the County Board will have virtually no reason to increase tax rates this year.

Speaking of commercial real estate, however, GlobeSt.com reported last weak the sale of two properties that sold far in excess of their 2007 assessments, suggesting that they may be underassessed. One is at 4501 Fairfax Drive and the other is 1310 North Courthouse Road. Both show “sales dates” late in December 2006, which is outside the window that the county’s assessment department normally would have used in determing the 2007 assessments

As the Sun-Gazette story noted, all properties are required to be assessed at fair market value (FMV). Consequently, when the 2007 assessments were posted at 5:00 PM today, it was interesting to note the real estate investors think these two properties are more valuable than does the county’s Department of Real Estate Assessments. Property owners wanting to delve further into DREA’s effectiveness may want to review the “assessment-sales ratio studies” of all Virginia jurisdictions performed by Virginia’s Department of Taxation.

January 16, 2007

“Has U.S. Income Inequality Really Increased?”

In this Policy Analysis published last week by the Cato Institute, Alan Reynolds answers that question. From the executive summary, Mr. Reynolds writes:

“There are frequent complaints that U.S. income inequality has increased in recent decades. Estimates of rising inequality that are widely cited in the media are often based on federal income tax return data. Those data appear to show that the share of U.S. income going to the top 1 percent (those people with the highest incomes) has increased substantially since the 1970s.

"However, there have been large changes in U.S. tax rules over time that have made a dramatic difference on what is reported as income on individual tax returns . . . .

"Measurements of inequality have also been affected by large reductions in income tax rates, particularly in 1986 , , , ,.

"In sum, studies based on tax return data provide highly misleading comparisons of changes to the U.S. income distribution because of dramatic changes in tax rules and tax reporting in recent decades. Aside from stock option windfalls during the late-1990s stock-market boom, there is little evidence of a significant or sustained increase in the inequality of U.S. incomes, wages, consumption, or wealth over the past 20 years.”

Where do those complaints of income inequality come from? Besides the drive-by-media, there is presidential candidate, former Senator John Edwards, and his call to end “two Americas.” There is also the op-ed, “Middle Class Blues: Maxed-Out Families and the Fading American Dream,” by former Congressional staffer Perry Weed that appeared late last year in The Washington Spectator.

Hopefully, Reynolds’ analysis will end the complaints of liberals and their progressive friends on the left who want to further redistribute your income by raising taxes.

HT to David Keating, blogging at National Taxpayers Union’s Government Bytes.

January 15, 2007

Hey General Assembly, the War of 1812 is Over!

Friday’s Richmond Times-Dispatch and Washington Post report on the news conference held the previous day in Richmond sponsored by the Tuesday Morning Group, a collection of fiscal conservatives and free-market activists.

According to the Times-Dispatch, the group “said yesterday, it is time to repeal a tax that was enacted to help finance the War of 1812. Del. Jeff Frederick (R-Prince William) said “it is also unfair, because it taxes gross receipts, even if a company is not making a profit.”

Ending the BPOL tax is just one of several legislative planks in the Freedom & Prosperity Agenda.

January 14, 2007

Assessing Real Estate: Art or Science?

On the front page of the Metro section of today’s Washington Post, there was a story about a Fairfax County homeowner who recently realized the county’s tax assessor had been assessing the home for 402 square feet more than the house had. According to the Post:

“County appraisers looking at the house from the outside assumed that there was a second floor room above the family room. In fact, the family room reaches to the roof, with high windows that could give the outward appearance of a second-floor room.”

The homeowner lost his appeal at the department level, but achieved victory when the county’s Board of Equalization lowered the assessment from $874,000 to $810,000, for a savings of $670.

Arlington County assessment notices for 2007 were due in the mail this past week. Consequently, Arlington County taxpayers should know by Tuesday one of the factors affecting their tax bills for 2007. Consequently, they should be alert to whether county records accurately depict their property. As the Post story notes:

“assessors rely on a combination of factors including the cost of building the house, the square footage and the location. Features such as a cathedral ceiling are not evaluated in square footage but in a formula for the overall quality of the house.”

If you have further questions about appealing your property's assessment, Arlington's Department of Real Estate Assessments has a great deal of information online, or you can call them at (703) 228-3920. The National Taxpayers Union publishes the booklet How to Fight Property Taxes.

January 13, 2007

Talk About Strange, Roanoke Times

The Roanoke Times may be the only newspaper in Virginia that is capable of making the Washington Post appear conservative by comparison. The editorial writers are in a snit today over several tax plans proposed by conservatives. As liberals like to do, they use an ad hominem attack with such phrases as “hardcore anti-tax activists,” “anti-tax conservatives,” and “diehard taxophobics.”

According to this draft report (requires Adobe) on state spending from the General Assembly’s Joint Legislative Audit and Review Committee (JLARC):

Over the past decade, Virginia's operating budget grew 87 percent, growing from $17.1 billion in FY 1997 to $32.0 billion. When adjusted for inflation, the budget increased by 48 percent. When adjusted for inflation and population growth, the budget increased 25 percent, an average annual increase of three percent.

In case the editorial folks at the Roanoke Times need a translation, it means that Virginia government is bigger, and the people of Virginia have less freedom and prosperity.

January 12, 2007

North Tract: Back on Track?

The Arlington Sun-Gazette reported on Monday, January 8, that Arlington County Board members “expressed optimism that their delayed North Tract land swap with a developer will ultimately go through. But they warn taxpayers that the county will not reap the financial windfall it had been expecting.” That was after a developer backed-out of a land-swap deal that would have netted the county $25 million.

This afternoon, the Sun-Gazette reports that “Arlington County government officials . . . announced a new North Tract land-swap deal, one that will not include the $25 million government officials expected to reap when the original agreement was signed two years ago.”

For more details, see this afternoon’s story. Here’s county’s press release, and here is the Examiner’s initial story dated January 9.

January 10, 2007

Getting Socked by the Federal Alternative Minimum Tax (AMT)?

According to the latest study from the Tax Foundation, “The AMT was originally designed as a backstop for the federal income tax, and affected only a small number of wealthy taxpayers.” However, the Tax Foundation also found that:

“its reach has grown in recent years, and it has begun drawing in middle- and upper-middle income taxpayers as well. In 2000 just 1.3 million tax returns were subject to the AMT. If left unreformed, the Joint Committee on Taxation estimates the number of AMT returns will spike to 19 million in 2006, reaching a peak of 29 million in 2010—nearly 20 percent of all tax filers—before tapering off sharply.1 As a result, reforming the AMT has become a key legislative priority for many Members of Congress.”

What pushes taxpayers into the AMT? According to the Tax Foundation:

“The factors that push taxpayers into the AMT are more prevalent in some areas than others, so it is not surprising that some congressional districts are more heavily affected by the AMT.

What pushes taxpayers into the AMT? Because the AMT is a parallel tax code to the ordinary federal income tax, when filing tax returns each April taxpayers must calculate their liability under both systems and pay whichever amount is highest. As a result, anything that decreases ordinary income tax bills or increases AMT tax bills pushes more taxpayers into the AMT. Several factors help explain why some areas are hit harder than others:”

 The Tax Foundation found that some Congressional districts are hit harder by the AMT than others. For example, in the "top 20" districts, the percentage of returns subject to the AMT ranges from 7.19% to 13.52%. while the percentage in the "bottom 20" districts is 0.53% or less. In Virginia's 8th Congressional disticts, which includes all of Arlington, 4.56% of taxpayers get socked by the AMT.

Ah yes, that wild and wonderful complex federal tax code. Time for a flat tax or a FairTax!

January 09, 2007

Need Another Reason NOT to Trust a Politician

Many Arlingtonians accept that government is good, and is to be trusted. Au contraire! A look at history should dissuade them of that idea. Look no further than at how the top and bottom federal individual income tax brackets have changed since the income tax first became law in 1913.

 

The National Taxpayers Union posted a great table at their website that traces the changes over time. For the first three years after the income tax became law in 1913, the “bottom rate” was 1% on taxable income up to $20,000 while the “top bracket” was 7% on taxable income above $500,000. By 1918 when World War I ended, the bottom rate was 6% on taxable income up to $4,000 with the top rate set at 77% on taxable income above $1 million. The “highest ever” top rate was 94% during the last two years of World War II. [The source for the NTU table is a March 2001 study (Adobe required) by Congress' Joint Committee on Taxation]. But don't think those rates drop much when the war is over, though. They don't!

 

When President Reagan entered the White House in 1981, the highest bracket was 69.125%, but was only 28% when he left office in 1989. Despite lowering the top bracket, federal tax revenues were significantly higher when he left office.

 

Talk about getting sold a bill of goods back in 1913. No wonder the so-called liberals, aka progressives, don’t want kids studying American history.

 

HT Rush Limbaugh.

 

January 06, 2007

County Board Jumps into Bed With Global Warming Alarmists

On Monday, we growled that the main feature from the Arlington County Board’s so-called “organizational meeting” would be the new chairman’s (Paul Ferguson) environmental initiative. Indeed it was. The Washington Post had two stories – on Tuesday, there was this page A1 story, but the more important story (to us) detailing the $6 million cost of the initiative was buried on the page B8 of Wednesday’s Metro section.

The key paragraph in Ferguson’s comments (most of the five pages of his comments were devoted to his global warming initiative) was this:

“Our climate is changing – and that change is causing harm. This is now a widely accepted scientific fact.

Well, no, Mr. Chairman! In a July 18, 2005 paper, Jerry Taylor of the Cato Institute writes:

“One might think that the increased political buzz around global warming is driven by science. One would be wrong. The scientific case for alarm is no more compelling today that it was yesterday.”

So for a cost to Arlington taxpayers exceeding $6 million, the chairman of the Arlington County Board wants to invoke solutions based upon . . . . What then? Alarmism? Science fiction?

According to the second Post article, Ferguson said “he was moved to launch the plan after studying environmental theories and seeing former vice president Al Gore’s documentary, “An Inconvenient Truth.” If Mr. Ferguson wants to do a bit more research, he might try Marlo Lewis’ “A Skeptic’s Guide to An Inconvenient Truth" (includes link to book, presentation slides, and video) According to Lewis, Gore’s effort:

“purports to be a non-partisan, non-ideological exposition of climate science and moral common-sense.” Rather Gore’s effort “is a colorfully illustrated lawyer’s brief for global warming alarmism and energy rationing,” and that “nearly every significant statement Gore makes regarding climate science and climate policy is either one sided, misleading, exaggerated, speculative, or wrong.”

Finally, Ed Feulner, President, Heritage Foundation, wrote on January 4, 2007:

“Those of us old enough to remember the 1970’s have no desire to relive those days. After all, it was an era of price controls, gasoline lines and stagflation. These ills were triggered when government attempted to ‘fix' the economy by subverting the free market. Instead it simply ended up creating an economic nightmare . . . . All this matters now, because many want us to repeat some of the same policy mistakes that made t he ‘70s an economic nightmare. This time, the impetus is ‘global warming,” but the prescription is the same: government controls and slower economic growth.”

For more, search “global warming” at the Cato Institute. Skepticism.net has this list of articles. And there’s this article at Fox News. Here is the text of Mr. Ferguson's New Year's Day speech, and the related county press release.

January 04, 2007

Kudos to Richmond's "Cranky Taxpayer"

Tuesday’s Daily Press from Newport News contains a nice story about John Butcher of Richmond although the story appears under the byline of the Richmond Times-Dispatch. Butcher runs The Cranky Taxpayer website where he posts analyses about “high taxes, high crime, lousy schools, and obdurate bureaucrats.”

The question that newspapers should be asking themselves is why they aren’t featuring stories with the kinds of charts and graphs John Butcher emphasizes at The Cranky Taxpayer. Some newspapers might learn why their circulation numbers continue plummeting. Oh, I forgot, taxpayers just pay the bills. It's the special interests that get the redistribution of our money, and the "drive by media" encourages ever higher taxes.

January 02, 2007

Kudos to the Head of GAO, but are his 535 Bosses On-Board?

David Walker, the Comptroller General and head of the U.S. General Accountability Office (still the GAO, though) is participating “in a series of town hall-style forums around the nation to discuss the federal government’s current deficit and the challenges posed by long-term demographic and economic trends,” according to this GAO webpage.

The objectives are “(t)o state the facts and speak the truth regarding the nation’s current financial condition and long-term fiscal outlook in order to increase public awareness and accelerate actions by appropriate federal, state, and local officials.” Partners in this effort include Concord Coalition, Heritage Foundation, Brookings Institution, Committee for Economic Development, Association for Government Accountants, AICPA, AARP, Committee for a Responsible Federal Budget.

Cpies of Mr. Walker’s presentations are available in Adobe’s (.pdf) format. Not trying to be cynical, but you have to wonder if Mr. Walker first tried out his presentation with the 535 Grand Masters of Congress?

January 01, 2007

Visions of Arlington's Anointed

The Arlington County Board held their traditional New Year’s Day “organizational” meeting this morning. The main feature coming out of the meeting is undoubtedly new chairman Paul Ferguson’s environmental initiative to reduce greenhouse gas emissions 10% by 2012. We’ll comment another day on the Board’s decision to cement its place as "Berkely on the Potomac."

We were more concerned to see how Board members would address the FY 2008 budget issue. Mr. Ferguson’s prepared comments contained only the following reference (each Board members’ comments are available here):

as we evaluate all of our needs and wishes, we will be unable to fund everything we would like. We have a strong economy, and a long history of prudent budgeting and comparatively low taxes and fees. We will continue these commitments.

Only Mr. Fisette elaborated somewhat in his comments about fiscal issues, which are contained in these three paragraphs:

On taxes and budget issues, I will continue to promote fiscal discipline and accountability in balancing responsible tax policies with needed public investments.

“The real estate boom is over, assessments are leveling off. Development of the FY 08 budget will be the most difficult and tight in many years.

“Our ability to undertake new capital projects is very limited. For several years we had made correct and important decisions to invest in our aging infrastructure and to develop several new and important facilities. These one-time obligations were made at a time when interest rates were low overall – and of course Arlington’s triple triple A bond rating allows us to borrow funds at the absolute lowest interest rates available. I agree with the Chairman, that we will not be able to fund everything we would like to in the future.

That doesn’t require a great deal of analysis, really. Let’s see, Mr. Ferguson and Mr. Fisette said much the same, which was “we will not be able to fund everything.” Sure sounds like what they say every year about this time. Now, isn’t it? And about the budget process being “the most difficult and tight in many years.” If that’s true, where are they going to find the money for their pay raises? Sounds like the Board’s usual prolixity.

The Arlingotn Sun-Gazette's reporting on the meeting is here.