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February 28, 2007

Overview of County’s FY 2008 Budget

As we noted yesterday, the County Manager presented his proposed FY 2008 budget on Monday afternoon. (the entire budget document is available in Adobe format at the county finance department’s website). Following are just a few of the items identified in the Manager’s budget overview:

  • 5.0% increase over FY 2007 revised budget; 5.9% if the County Board adopts all proposed “policy priorities” and “strategic options”
  • 4.5% increase in County operations
  • 5.9% increase in “schools transfer”

Sources of FY 2008 General Fund Revenues:

  • 51% from real estate revenues
  • 11% from personal property tax
  • 7% from the Commonwealth
  • 6% from BPOL tax
  • 4% from sales tax
  • 4% from service charges
  • 4% from miscellaneous local taxes
  • all other sources are 3% or less

In 2000, the commercial tax base (apartments and commercial) represented 51% of the total real estate tax base with residential property (single-family and condominiums) representing 49%. By 2006, the split became 60% residential and 40% commercial. In 2007, the split narrows to 58% and 42%, respectively.


Make your views known to the County Board. Attend the budget and tax rate hearings on March 27 and March 29, respectively. Both hearings will begin at 7:00 pm in the County Board room, 3rd floor, Courthouse Plaza, 2100 Clarendon Boulevard.

February 27, 2007

A Tax By Any Other Name Still Costs Money

Today’s Washington Post and this week’s Arlington Sun-Gazette report on the County Manager’s proposed Fiscal Year 2008 budget, which he presented to the Board on Monday afternoon.

Annie Gowen of the Post started her story with:

“Arlington County is considering an energy tax on residents to help pay for its high-profile initiative to reduce greenhouse gas emissions, officials said yesterday in proposing a $873.6 million spending plan for the coming year.”

Scott McCaffrey of the Sun-Gazette started his story with the good and the bad:

“Many Arlington homeowners will save money on real estate taxes this year, but those savings would be eaten up by increases in other county government fees, under a proposed fiscal 2008 budget presented by County Manager Ron Carlee.”

For the details of the budget the county wants you to know, here’s yesterday’s press release. The entire two-volume set of budget documents is available at the Department of Management & Budget’s website. Come back soon, and  we'll have new postings as we work through the two, thick volumes of the budget, not to mention the schools budget, which gobbles up almost 48% of tax revenues.

February 26, 2007

1960’s Middle-Class Is Not Today’s Middle-Class

The Tax Foundation released one of their periodic ‘fiscal facts’ dated January 29, 2007 , which reported that an upcoming U.S. House Ways and Means Committee hearing would focus “on the economic challenges facing the ‘middle-class’” so the committee could “investigate the notion that today’s families are experiencing economic pressures greater than those faced by their parents’ or grandparents’ generation.”

The Tax Foundation continued:

“To understand this issue, however, Members first need to understand how different today's families are from those of 40 or 50 years ago and how demographic changes have affected the notions of who is "middle-class" and who is upper-income in America.

“If by "middle class" we mean intact families with children (the stereotypical family of four), then these families no longer comprise the majority of the statistical middle 20 percent of taxpayers. The majority of families with children now populate the wealthiest 40 percent of Americans, in part because of the growth in dual-earner households. So if Ways and Means members focus too much on the "median family" or "median taxpayers" they will not be accurately portraying the economic status of today's working families.”

Using data from IRS’ public use files, the Tax Foundation provides charts, which graphically show that “in 1960, the majority of statistical ‘middle class’ were married couples and families with children.” By 2002, “(m)ore than two-thirds of modern middle-income taxpayers are single, or single-headed households, while 36 percent are married . . . The majority of couples with children are now clustered in the top two quintiles.”

Perhaps most importantly, the Tax Foundation says:

“These demographic shifts have no doubt contributed to the perception of rising income inequality. When the so-called rich are increasingly couples with two incomes, they will naturally look wealthier than the vast number of single taxpayers who now populate the statistical middle.”

February 25, 2007

I Say 'Lavish,' You Say 'Reasonable'

Today’s Washington Post reports on an audit of the spending habits of the head of the Smithsonian Institution. The Post writes:

“Lawrence M. Small, the top official at the Smithsonian Institution, accumulated nearly $90,000 in unauthorized expenses from 2000 to 2005, including charges for chartered jet travel, his wife's trip to Cambodia, hotel rooms, luxury car service, catered staff meals and expensive gifts, according to confidential findings by the Smithsonian inspector general.”

In addition, the Post noted Small got $1.15 million for “making his house available for official functions.” Did Small have to reimburse the Smithsonian? Not hardly. The newspaper wrote that the Smithsonian’s Board of Regents:

“referred the inspector general's findings to its audit committee, made up of four regents. The board last month accepted the committee's decision to dismiss the findings and defended Small's expenses as "reasonable." The regents also decided to rewrite several rules to authorize many of the transactions that had been deemed in violation of policy.”

According to the Post, Sen. Charles Grassley (R-Iowa), who requested the report, is “shocked at what the Smithsonian is spending its money on.” Taxpayers should be, too!

February 22, 2007

When Is A Budget Cut A Budget Cut

The Superintendent of the Arlington Public Schools presented his proposed Fiscal Year 2008 budget to the School Board this evening. At first glance, the budget seems rather constrained, e.g., the growth in per-pupil cost would be just 3.3%, much less than in recent years. The School Operating Fund would increase from $315.3 million to $328.2 million (4.1%) while total School expenditures increases from $394.3 million to $410.0 million. The on-camera presentation by the Superintendent was followed by the first of several budget worksessions between the Board, Superintendent, and senior staff.

During his presentation, the Superintendent explained that about $4.7 million of the money to pay for the budget would come from “redirected” money. To appreciate what “redirected” means requires understanding just how difficult it is for a bureaucrat to say “budget cut.” A good deal of time at the worksession was devoted just to gaining an understanding of what was meant by “redirected.” Finally, one of the Assistant Superintendents explained that if a department head has been doing ‘x’ for 10-years, but is not required to also do ‘y’ that will cost $100,000, but no additional money is available, then the department head must figure out how t o do ‘x-$100,000’ plus ‘y.’ So put $100,000 in the column labeled “redirected” spending. Sounds like a budget cut to us.

Taxpayers can access the Superintendent’s presentation and the proposed budget at the Budget & Finance webpage. For the Schools version of the proposed budget, read the press release. To better understand where almost half of your taxes go, all Arlington taxpayers are encouraged to attend the budget worksessions -- generally held either Tuesday or Thursday evenings.

February 20, 2007

Understanding the Welfare State

Can’t figure out why politicians do the things they do? In a column at RealClearPolitics today, Thomas Sowell uses a municipal golf course in San Francisco to explain what motivates politicians, and explains how the poor are used:

“Among the many rationales used to defend the welfare state, the most powerful is that it is necessary, in order to take care of the poor and the downtrodden. But the amount of money required to bring every poor person in the country above the official poverty line is a fraction of what is spent by government on the welfare state.

“Put bluntly, the poor are in effect being used as human shields in the political wars over government spending, which extends far beyond anyone who could even plausibly be called poor.

“Politicians will spend money wherever that is likely to increase their chances of getting re-elected. Of all the things that governments spend money on, none is further removed from fighting poverty than municipal golf courses.

“Are the taxpayers being asked to support municipal golf courses so that the poor and the downtrodden can play? Not bloody likely.”

He concludes the column by saying “Politics is priceless” And unfortunately it's taxpayers who pay the price.

February 19, 2007

"Deal or No Deal"

The 2007 General Assembly is set to close this week, and the transportation issue is still unsettled. As we noted yesterday, the House of Delegates has a plan that does not require a general tax increase. We also pointed out that for the past several years, Sen. John Chichester (R) and his Senate Finance Committee have been roadblocks to improving transportation without tax increases.

Hugh Lessig of the Newport News Daily Press reported on Sunday (requires free registration) that the Senate has passed two competing plans. One rejected drawing from the general fund, but proposes a variety of fee increases and regional funding approaches. The other “avoids a regular reliance on the general fund,” but “leans heavily on a $150 initial vehicle registration fee.

Lessig does a good job painting the picture that the bill that comes out of the House-Senate conference committee is likely to be “this or nothing.” So stay tuned.

There’s an accompanying piece identifying members of the conference committee, but note that Northern Virginia has only one of the eleven members.

February 18, 2007

"Tax Increases Not Needed for Transportation"

The president of the Fairfax County Taxpayers Alliance (FCTA), Arthur Purves, notes in an op-ed in Friday’s DC Examiner that the Virginia House of Delegates passed HB3202 that would increase transportation spending by $1.5 billion annually. The money would come from higher fees and bond proceeds with a significant portion coming from the General Fund surplus.

He also asks a question that taxpayers should be asking their state legislators, which is why shouldn’t transportation spending compete with others function for the faster growing General Fund portion of the budget rather than from Non-General Fund revenues. Afterall, it’s not that General Fund programs have been starving for revenue. For example, Purves notes that during the past two-year budget cycle, spending for K-12 education has increased 19%, for higher education 22%, public safety 15%, mental health 21%, and for the Chesapeake Bay 38%.

According to Purves, the education establishment doesn’t want to share General Fund revenues with transportation, and they’ve found an ally in Sen. John Chichester (R), chairman of the Senate Finance Committee. Last year, Chichester blocked an attempt by the House of Delegates to spend $700 million of the General Fund surplus on transportation.

Hey Senator, in case you were wondering, it’s all the taxpayers’ money.

February 17, 2007

Arlington County In Battle to Friter Away Tax Dollars

Friday’s Washington Post’s Metro section reports the Alexandria City Council unanimously approved “the city's first poet laureate, a position believed to be unprecedented among the region's cities and counties.” The role of the poet laureate is to “integrate poetry into city life by organizing poetry readings and using poetry to celebrate the city's cultural heritage, including its birthday.” The cost? A $500 annual honorarium and “about $3,500 in administrative expenses.”

But not to be outdone, late yesterday afternoon Arlington County released a press release saying the County “used $20,000 in grant funds from the Department of Homeland Security to purchase and supply” a 20-foor trailer as an emergency animal shelter. The trailer will "remain parked" at the Animal Welfare League of Arlington, which will operate it for the County.

At times, it really is difficult to find words to describe just how wasteful government can be.

February 14, 2007

If The Pay Stinks, Then Why Do They Serve?

Stateline.org reported yesterday on a study of state legislators’ pay, which showed their pay was declining when adjusted for inflation. For example, Stateline began by saying, “Legislators in Alabama, New Hampshire and Texas are paid the same today as when Gerald Ford was president in 1975.” More specifically, they wrote:

In 28 states, state lawmakers’ salaries have declined when adjusted for inflation, according to a first-of-its-kind study of legislative pay from 1975 to 2005 by the nonprofit Council of State Government.

”In the 22 other states, elected representatives' paychecks surpassed inflation by as little as 0.8 percent in Missouri over the 30-year period, to as much as 745 percent in Idaho, where lawmakers earned $15,646 in 2005.”

The CSG study also looked “at other forms of compensation, such as per-diem, expense allowances and retirement benefits, but not other perks like car allowances.” However, Stateline.org did not report on this other compensation, but provided a handy chart of legislative pay in 2005. Nor did Stateline delve into possible reasons legislators continue serving.

February 12, 2007

Hey, General Assembly, We Don’t Need Another Tax Hike

In a February 8, 2007 press release, the National Taxpayers Union slammed Virginia legislators for proposing another tax increase. The press release cited a statement by NTU’s president, John Berthoud, which included the following:

Virginia legislators just can’t seem to stop meddling with a healthy economy that is producing budget surpluses. The Commonwealth finished last year with a revenue windfall of $557 million and over $1.1 billion in the budget stabilization fund. Talk of tax hikes shouldn’t even be rising above a whisper with this much taxpayer cash already sitting in Richmond. In fact, lawmakers should be working to help reduce taxes, especially those triggered by rising property assessments.”

NTU said the legislators’ priorities should be increasing the budget stabilization fund, combating waste, and low-priority spending. Enough said!

February 07, 2007

Uncle Sugar's Steamin' Down the Tracks

According to a February 2, 2007 press release from the National Taxpayers Union:

Despite clearing one legal challenge, nothing has changed in the fatally-flawed $2.5 billion loan application from the Dakota, Minnesota, & Eastern Railroad (DM&E) to warrant approval from federal officials,

NTU added:

This shaky venture would be the largest loan to a private company in the federal government’s history and put taxpayers on the hook if the company defaults.

According to the press release, the study concluded:

“The federal government should not be the fall-back lender for a business that can't succeed in the real world. DM&E and its appeal for a federal loan is just another case of corporate welfare aided by high-level connections.”

Our thoughts exactly. If you prefer the complete study, it’s Issue Brief 159.

February 03, 2007

Are Public School Teachers Really Underpaid?

The authors of a new study on teacher pay write in yesterday’s OpinionJournal.com:

“According to the Bureau of Labor Statistics, public school teachers earned $34.06 per hour in 2005, 36% more than the hourly wage of the average white-collar worker and 11% more than the average professional specialty or technical worker.”

That said, they continue, “In the popular imagination, however, public school teachers are underpaid.” The even cite the First Lady, Laura Bush, who said, “Salaries are too low. We all know that.”

With the reauthorization of NCLB soon to be debated, they argue the debate should focus “on the actual salaries teachers are paid.” They add, “It would also be beneficial if the debate touched on the correlation between teacher pay and actual results. To wit, higher teacher pay seems to have no effect on raising student achievement. (Emphasis added) The study’s authors conclude:

“The fact is that teachers are better paid than most other professionals. What matters is the way that we pay public school teachers, not the amount. The next time politicians call for tax increases to address the problem of terribly underpaid public school teachers, they might be reminded of these facts.”

February 02, 2007

Analysis Shows Arlington County Assessments are Fair

We just completed analyzing 41 residential properties (20 single-family and 21 condominiums and/or townhouses) selected at random, and it shows there is virtually no difference between assessments of the two classes of residential real estate. For each property, an “assessment-sales ratio” was computed, which parallels the methodology used by Virginia’s Department of Taxation for their annual, statewide assessment-ratio study. We did the analysis to determine if there was any differences between the two classes since it is generally much easier to identify comparable properties for condominiums and townhouses than it is for single-family homes.

For the 20 single-family properties, the assessment-sales ratio was 91.7% while the ratio for the 21 condominiums and/or townhouses was 91.8%. A property’s assessment is important because it represents one of the two factors used to compute real estate property taxes. The other factor, the tax rate, is set by the County Board based upon the tax revenues they need to pay for their spending.

Congratulations to Arlington’s Department of Real Estate Assessments. To look up comparables for your neighborhood, visit the DREA website.

February 01, 2007

Arlington County Board Members Set Higher Salary Ceiling

The online Arlington Sun-Gazette reported yesterday:

“County Board members on Jan. 30 voted to pay themselves up to 45 percent more over the next four years, but resisted the temptation to boost salaries even higher despite an apparent disinterest in the subject by the public.

"Acting in accordance with a new state regulation, board members voted 5-0 to set their maximum pay level through 2011 at $49,000 annually. Currently, board members are paid $33,723 per year.”

Guess all that spending they had to do as a result of all those windfall taxes they collected since 2000 makes them work harder.

For more detail about they salaries, see item 34 of the Board's January 30 meeting.