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June 30, 2008

And The Objective Was What?

Chris Edwards, director of tax policy studies at the Cato Institute wrote an interesting “policy analysis” last year on federal aid to the states as a historical cause of government growth and bureaucracy. In the executive summary, he begins by saying:

“In recent years, members of Congress have inserted thousands of pork-barrel spending projects into bills to reward interests in their home states. But such parochial pork is only a small part of a broader problem of rising federal spending on traditionally state and local activities.

“Federal spending on aid to the states increased from $286 billion in fiscal 2000 to an estimated $449 billion in fiscal 2007 and is the third-largest item in the federal budget after Social Security and national defense. The number of different aid programs for the states soared from 463 in 1990, to 653 in 2000, to 814 by 2006.”

And later writes:

“At all levels of the aid system, the focus is on spending and regulations, not on delivering quality services. And by involving all levels of government in just about every policy area, the aid system creates a lack of accountability. When every government is responsible for an activity, no government is responsible, as was evident in the aftermath of Hurricane Katrina.

“The failings of federal aid have long been recognized, but reforms and cuts have not been pursued for years. Aid has spawned a web of interlocking interests that block reform, including elected officials at three levels of government, armies of government employees, and thousands of trade associations representing the recipients of aid.”

A link to the entire policy analysis is available after the brief executive summary. Understanding how government grows is a necessary step in bringing the country back to the Founders’ vision of limited government.

June 28, 2008

Cost of Presidential Candidates’ Promises

With about 125 days until the 2008 elections in November, and with the presumptive candidates of the two major parties all but nominated, taxpayers can take a look at just how deeply Senators McCain (R-AZ) and Obama (D-IL) intend to reach into our pockets.

The National Taxpayers Union Foundation (NTUF) released the third round of “costing out” candidates’ platforms on June 3, which showed Sen. Obama would increase yearly federal spending by $343.9 billion while Sen. McCain would increase annual spending by $68.5 billion. Perhaps those numbers explain the candidates’ most recent Congressional ratings -- ratings that present a comprehensive picture of their fiscal records:

  • Barack Obama    F (5%)
  • John McCain        A (88%)

NTUF also reports that Sen. McCain, dating to 1992, has received an “A” rating 67% of the time.

The Tax Foundation released a study on June 26 that focuses on the “tax redistribution” effects of the two candidates plans. According to the Tax Foundation’s president, Scott Hodge:

“Obama's plan would greatly accelerate the decades-long trend toward a federal government that depends for tax revenue almost exclusively on a few high-income people.

“This contrasts starkly with the McCain plan, according to Hodge, which would give every taxpayer a cut and leave the current tax burden distribution approximately where it is.”

According to Hodge, "Under the Obama plan for 2009 . . . more than $131 billion would be redistributed from the top 1 percent of taxpayers to all other taxpayers." He then adds, “In other words . . . it is at this point a cautious estimate to say that in 2009, under Obama's plan, 1.13 million Americans would pay more in all federal taxes than 128 million of their fellow citizens combined."

We are reminded of the words of Alexander F. Tytler, an 18th century Scottish judge and historian, who said:

“A democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury.”

June 27, 2008

The Value of Being on the List

Citizens Against Government Waste (CAGW) has named their June “Porker of the Month. He is none other than Senator Chris Dodd (D-CT) and Chairman of the Senate Banking Committee. Why?

“(F)or accepting a preferential mortgage deal from a company which stands to benefit from a mortgage bailout bill he is pushing through Congress.”

CAGW explains their selection of Sen. Dodd by writing:

“Sen. Dodd acknowledged receiving a “VIP” loan from Countrywide Financial Corporation, but denied that he knew the designation meant he would be receiving special privileges because of his position as the chairman of the Banking Committee.  Sen. Dodd is one of several current and former high-ranking officials, including Senate Budget Committee Chairman Kent Conrad (D-N.D.) and former Fannie Mae CEO Jim Johnson, who was on a special “Friends of Angelo” list, named after Countrywide Financial Corporation Chairman and CEO Angelo Mozilo.  According to published reports, Chairman Dodd’s special mortgage rate reduces his costs by $75,000 over the 30-year life of the mortgage.”

Perhaps just the latest reminder of the wisdom of Mark Twain, who said:

“There is no distinctly native American criminal class save Congress.”

June 26, 2008

Virginia Senate Approves 35 Percent Hike in Gas Tax

According to an “action alert” received earlier today from the Family Foundation of Virginia:

“The General Assembly today recessed until July 9th, giving legislators an opportunity to return to their home districts to hear from citizens on the proposed 35 percent increase in the state’s tax on gasoline.

“Before leaving, the House of Delegates Committee on Rules defeated Governor Kaine’s proposed tax hike package by a vote of 11-4. Two Democrats joined with Republicans in the overwhelming defeat.  Then, the same committee sent the Senate's gas tax hike to the full House floor without recommendation by the same 11-4 vote.

“Governor Kaine’s tax bill was never introduced in the Democrat controlled Senate.  Instead, yesterday, Democrats in that chamber passed the gas tax bill patroned by Senate Majority Leader Dick Saslaw (D-35, Springfield). The bill passed 21-16.

“Despite another major hike in the price of oil again today, Senate Democrats are unapologetic in their support for the increase in the gas tax.  The vote by the House rules committee today sets up a political showdown on July 9th when all 100 members of the House will have to go on record for or against the hike.

Reporting about the special transportation session in Richmond from the Washington Post has been somewhat  partisan, i.e., reporting in favor of Virginia’s Democrats. Want proof? Compare the following two paragraphs, both of which are the first paragraphs of their respective stories. The first talks about the passage in the Senate of Sen. Saslaw’s 35% hike in the gas tax, but there is no mention of party affiliation. In the second you will see where you learn at the very beginning of just who is responsible for rejecting the transportation proposal (the second paragraph below was posted at 3:44 PM, but the partisanship has been edited out of the print versiion):

“RICHMOND, June 25 -- The Virginia Senate voted along party lines Wednesday to raise the gas tax by 6 cents, but officials in both parties say the measure has almost no chance in the House of Delegates, leaving many legislators to wonder whether any plan to pay for transportation will be resolved in the current special session.”

“RICHMOND, June 26 -- A Republican-led House of Delegates committee Thursday morning rejected Gov. Timothy M. Kaine's proposal to raise $1 billion a year in taxes and fees for transportation projects, effectively denying the bill an up-or-down floor vote in the special legislative session.”

In a letter to members of the General Assembly urging rejection of Gov. Kaine’s $1 billion tax increase, the National Taxpayers Union pointed out:

“During a time of high food and fuel costs, these increased tax burdens could significantly hurt the already-tight budgets of everyday Virginians. Before another dollar is ripped from the hands of families and businesses, the Commonwealth should ensure that every dollar it already takes is used in the most efficient manner possible.

“To that end, we urge you to support a comprehensive external performance audit of the Virginia Department of Transportation. Such audits have been completed in other states with positive results. Having a better understanding of existing outlays and potential economies will better help the General Assembly to meet current and future transportation demands in ways that will not raise taxpayer burdens or damage the economy.”

While General Assembly members are in recess until July 9, we urge ACTA members, and all concerned taxpayers, to contact your Senator and Delegate in the General Assembly. As indicated by poll data at the Family Foundation blog, tell them to:

“Re-prioritize spending and re-formulate budget spending formulas, make real cuts in needless programs and shift current tax money to transportation and create a transportation lock box:”

And be sure to tell them to audit VDoT before picking our pockets.

To see thre reaction to the General Assembly's special transportation session in Southeast Virginia, read the Virginian-Pilot's take. Northern Virginians also need to closely read the print version of the Washington Post referenced above, which are:

“On Thursday, House Republican leaders fast-tracked a bill to salvage the regional plans by providing millions of dollars in state-imposed and locally enacted taxes into Northern Virginia and Hampton Roads, but in vastly different ways.

“The Northern Virginia proposal, which would bring in $156 million in new revenue a year, includes a $100 license fee for new adult drivers, an increase in the tax on home sales of 40 cents per $100 of assessed value, and a 2 percent tax increase on rental cars and hotel rooms.

“Some parts of last year's regional plan in Northern Virginia remain intact, including a commercial real estate tax that would bring in an additional $208 million.

"This compromise in my opinion is the only thing that at the end of the day is going to bring Northern Virginia any money," said Del. David B. Albo (R-Fairfax). "This is the best I can get."”
Is the fix in? “We report, you decide.” 

June 24, 2008

Horatio Bunce, Responsible Citizen

The Foundation for Economic Education (FEE) introduces “Not Yours to Give” as a tale of “Davy Crockett’s experience when he was a member of Congress (1827-31). FEE notes it is the second most popular of their “timely classics,” and they begin thus:

“Holders of political office are but reflections of the dominant leadership—good or bad—among the electorate. Horatio Bunce is a striking example of responsible citizenship. Were his kind to multiply, we would see many new faces in public office; or as in the case of Davy Crockett, a new Crockett.

“One day in the House of Representatives, a bill was taken up appropriating money for the benefit of a widow of a distinguished naval officer. Several beautiful speeches had been made in its support. The Speaker was just about to put the question when Crockett arose.”

Unfortunately, America today has too few members of Congress who are like the “new Crockett.” Even more unfortunately, America has even fewer citizens like Horatio Bunce, a backwoods farmer who knew the Constitution better than his Congressional representative, the “old Crockett.”

Take a few moments to learn the lesson that Horatio Bunce taught Davy Crockett -- a lesson that enables Crockett to become the “new Crockett.”

June 23, 2008

Let the Taxpayers See How It's Spent

The editorial in the weekend edition of the Examiner newspaper reports on a movement that hopefully will result in both the county and schools sides of Arlington County  government doing the same. According to the editorial:

“A grassroots movement to have public schools post their check registers online is spreading like a Texas wildfire, which is appropriate since the Lone Star state is where the idea originated less than two years ago. Some 200 school districts in 14 states now post $47 billion of expenditures online, including Miami – the fourth largest school system in the nation. Such an extraordinary degree of financial transparency is unheard of in the vast majority of public school districts across the country. That should change.”

A paragraph later, the editorial continues:

“Taxpayers in most states are legally entitled to financial records under freedom of information laws, which often require school administrators to provide the data upon request. But it would take a lot less effort and cost almost nothing simply to post online a PDF of the district's monthly check register, as is done in Texas. It's much easier for citizens to track school expenditures when this information is readily available 24/7.”

In closing, the editorial notes that:

“many local jurisdictions already provide a fully transparent and easily searchable database of all private property – including the owner's name, address, square footage and purchase price. Since real estate taxes pay for most of the public education in America, it's only fair that homeowners be given equal access to information detailing exactly how their hard-earned money is being spent. Activists groups like Americans for Tax Reform's Center for Fiscal Accountability are working hard to make sure taxpayers get that access.”

We hope the respective chief financial officers of Arlington’s county and schools local governmental units will take the initiative to implement this common sense action as quickly as possible. Such action has been requested in the Arlington County Civic Federation’s 2008 Revenues & Expenditures report (requires Adobe).

UPDATE (6/23/08) Transparency has wide-ranging support. A search at the National Taxpayers Union identifed numerous 'hits' including this letter to a government official in Great Britain. In Virginia, Tertium Quids is helping to build bipartisan support in the General Assembly for greater transparency in Virginia state government.

June 21, 2008

Hey Congress, Investigate This

Instead of conducting investigations that could result in more effective government, Congress is off investigating the use of celebrity doctors in ads for selected prescription drugs or “show trials” of oil company executives. Rather, Congress should investigate what the National Taxpayers Union (NTU) calls “a chronically ill procurement process.” In brief:

“Late yesterday, GAO announced that the Air Force "had made a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman," and announced that GAO investigators "denied a number of Boeing's challenges" because there was no "basis to conclude that the agency had violated the legal requirements with respect to those challenges." A third bidding process will likely occur.

“Now that the contract is essentially back to square one, neither the people who pay America's bills nor those who defend America's soil can afford further missteps -- not from the Air Force, the companies involved, or Congress," (NTU Vice President for Policy and Communications Pete) Sepp concluded. "Without major reforms to government purchasing practices, the future will hold more grim reminders of why the weapons acquisition process has been on GAO's own high-risk list for 17 years straight."

The U.S. General Accountability Office wrote in a three-page statement:

“Our review of the record led us to conclude that the Air Force had made a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman.”

The Air Force actually made seven separate mistakes, according to GAO. It seems the only winners so far are the Air Force bureaucrats who will be able to continue more months of paper-shuffling as the selection process is reopened. And who lost? As always -- the taxpayers. Why isn't Congress trying to find ways to improve the effectiveness of the procurement process?

The Seattle Post-Intelligencer’s report, entitled “Boeing back in tanker running” is here.

June 20, 2008

Thoughts to Think About

Some notable quotes to think about:

  • "I began reading not only the economics of Thomas Sowell (our greatest contemporary philosopher) but Milton Friedman, Paul Johnson, and Shelby Steele, and a host of conservative writers, and found that I agreed with them: a free-market understanding of the world meshes more perfectly with my experience than that idealistic vision I called liberalism." -- David Mamet
  • "The most unresolved problem of the day is precisely the problem that concerned the founders of this nation: how to limit the scope and power of government. Tyranny, restrictions on human freedom, come primarily from governmental restrictions that we ourselves have set up." -- Milton Friedman
  • "At one time, to call someone "green" was to disparage them as inexperienced or immature. Today, to call someone green is to exalt them as one of the environmentalist saviors of the planet. But it is amazing how many people are green in both senses. Some people who think it is wrong to tell children to believe in Santa Claus nevertheless think it is all right to tell adults to believe that the government can give the whole population things that we cannot afford ourselves. Believing in Santa Claus is apparently bad for children but OK for adults." -- Thomas Sowell
  • “The mounting burden of taxation not only undermines individual incentives to increased work and earnings, but in a score of ways discourages capital accumulation and distorts, unbalances, and shrinks production. Total real wealth and income is made smaller than it would otherwise be. On net balance there is more poverty rather than less.” -- Henry Hazlitt
  • “The worst thing in this world, next to anarchy, is government.” -- Henry Ward Beecher
  • "Listening to politicians campaign yields about as much information as listening to insects buzzing: in both cases you're made aware that annoying, and possibly dangerous, pests are nearby." -- Don Boudreaux
  • "Need" now means wanting someone else's money. "Greed" means wanting to keep your own. "Compassion" is when a politician arranges the transfer. -- Joseph Sobran
  • "The whole idea of our government is this: If enough people get together and act in concert, they can take something and not pay for it." -- P.J. O'Rourke

First, Audit VDoT

Thanks to Norm Leahy, the irreproachable blogger at Tertium Quids, for reporting the “welcome development” that:

“GOP House Caucus chairman Sam Nixon issued the following statement on the need for a thorough outside audit of VDOT.”

According to Sam Nixon’s statement, the GOP House Caucus wants:

“a private sector entity (to) conduct this performance audit of VDOT in order to identify opportunities for cost savings, private sector involvement and unnecessary or unproductive programs that could be reduced or eliminated.”

Norm posted a subsequent item that linked to a Virginian-Pilot news article on transportation, which identified money directed to VDOT, which were “on top of monies already allocated to VDOT in each year’s budget.” For example, $3 billion in borrowing and almost $1 billion in “directed surpluses.”

Not only is the call for a performance audit a “welcome development,” it is also the prudent thing to do in a time when taxpayers are being asked by all levels of government, as we growled just yesterday, to shoulder increasing tax burdens.

Browse Norm’s other blog entries at Tertium Quids! It won’t be your last.

UPDATE (6/22/08): Contact information for your Virginia senator or delegate is available at this Virginia General Assembly website.

June 19, 2008

New County Bond Reality: Days of Whine and No-No

Well, that’s not what Arlington County's elected political leaders were told at yesterday’s joint meeting of the County and Schools Boards, but Scott McCaffrey reports in a story posted today at the online Arlington Sun-Gazette:

“Increases in tax rates and reductions in county services loom in coming years, unless economic conditions surprise the experts and turn significantly upward, County Manager Ron Carlee believes.

“Carlee on June 18 predicted there was an “extremely high probability” that the County Board will need to raise the real estate tax rate again next year, and a substantial probability that any rate increase would have to be coupled with reductions in services.”

Carlee then went on to say that a train wreck isn’t likely. According to McCaffrey:

“While the situation is not good, Carlee said it isn't catastrophic, either.

“I don't think I'm a prophet of doom,” he told board members at a work session.”

In a related online story today, however, McCaffrey reports:

“County Board members and their School Board colleagues appear united on moving forward with a proposed set of 2008 bond referendums, but are at loggerheads over when to seek voter support for what will be one of the biggest projects in county history: a $157 million rebuilding of Wakefield High School.”

Apparently, neither the Superintendent nor School Board members heard what County Manager Ron Carlee said about economic conditions over the next several years, as McCaffrey reports:

“Under sharp questioning from County Board members, Smith and School Board members had trouble coming up with specific reasons why the Wakefield project couldn't wait for inclusion in the 2012 referendum.”

McCaffrey concluded his second report with this paragraph:

“Even though all 10 participants were Democrats, the work session between the two independently-elected bodies had its fair share of sniping, lecturing, posturing and tension. At one point, Smith attempted a budget joke, but few on the County Board side of the table could be seen laughing.”

Is a train wreck looming in Arlington County's future? If the County Board remains steadfast, and ln fact listens to the financial advice provided by the Manager, then it’s not very likely. However, take a look at the graph on page 18 of the Manager’s slide presentation (available here; requires Adobe). Perhaps not likely, but also looming on the horizon are increasing tax burdens by the state because of transportation funding currently being pushed, not to mention increasing tax burdens needed to fund the federal “entitlements” train wreck. Just how much tax burden are taxpayers willing to shoulder?

HT to Wayne Kubicki for his assistance on interpreting the Manager's slides and improving my original title which asked whether a train wreck loomed in Arlington County's future.

June 18, 2008

Generational Equity

In a special report, the Tax Foundation addresses the question of “which age groups pay more tax, and which receive more government spending?” The four key findings from their study were:

  1. “As the Baby Boom generation prepares to retire, lawmakers should be aware of the distribution of taxes and government spending across age groups;
  2. “America's youngest households aged 25 and under received $2.32 in government spending for each dollar of taxes paid in 2004. Middle-aged households aged 45 to 54 received $0.73 per tax dollar, and America's oldest households aged 75 and over received $4.93 per dollar of taxes paid;
  3. “As a group, households aged 35 to 64 pay more in taxes than they receive in government spending, while households under age 35 and over age 64 receive more government spending than they pay in taxes. Overall between $376 billion and $872 billion per year is fiscally transferred from middle-aged groups to the youngest and oldest Americans each year through government taxes and spending;
  4. “Over a lifetime, government spending follows a U-shaped pattern, with large education and welfare spending in youth and large Social Security and Medicare payments in old age. But even within each age group, there are large differences in taxes and government spending across households at different income levels.”

These are the key findings in the study. but there is much good, detaled information in this special report (you will need Adobe to read the entire report). Thanks, Tax Foundation, for exploring which Americans shoulder the nation’s tax burden.

June 17, 2008

Arlington County Police: Taxpayer Friendly, Too

The Arlington Sun-Gazette reported yesterday the Arlington County Police Department (ACPD) will no longer participate in the accreditation program of the Commission on Accreditation for Law Enforcement Agencies (CALEA). Scott McCaffrey writes:

“A quarter-century ago, the Arlington County Police Department was among the first in the nation to receive formal, national accreditation. But the department won't be participating in the program going forward.

“Government officials have decided not to seek re-accreditation by the Commission on Accreditation for Law Enforcement Agencies (CALEA). The organization first accredited the police department in 1984, making the Arlington police the second law enforcement agency in the nation to gain its seal of approval.”

A fact sheet, available from the police department, said “The accreditation process requires a heavy commitment of staff time and County resources,” e.g., submission of annual reports that show compliance, and other costs for processes “not integral to improving public safety services.” When comparing costs and benefits, the department found that accreditation “yields few tangible benefits for the department or the County.” How will taxpayers benefit? “ Personnel savings will be used to hire a Court Liaison to enhance coordination with the County’s General District Court and Circuit Court.”

If the Police Chief sees little benefit in continued CALEA accreditation, taxpayers may want to ask their favorite County Board member how taxpayers benefit from the many other accreditations. For example, what are the costs and what are the benefits of having county bonds rated by three separate rating agencies, i.e., Moody’s, S&P, and Fitch’s?

June 16, 2008

And Metro Wants Us To Trust Them With $1.5 Billion

The Metro section of this morning’s Washington Post reported that Marion Barry, Washington, D.C.’s so-called “Mayor for Life” got “a break, then a check” from the Metro General Manager. Seems Barry’s Mercedes-Benz was sideswipped, or not, by a Metrobus. According to the Post:

“About a month later, Barry filed a claim against Metro. Metro tracked down the bus operator, who denied hitting any vehicle. There was also no damage to the Metrobus. Unable to confirm Barry's account, a mid-level Metro manager advised against paying the claim.”

So was that the end of it? The Post first noted “this was not just any claimant. This was Barry.” So what happened? According to the Post:

“So when his accident claim was brought to the attention of Metro General Manager John B. Catoe Jr. last year, Catoe decided to make an exception.

"We couldn't prove it one way or the other," Catoe said in a recent interview. "The reality is, he's a member of the board of directors.

"In my judgment, I did not feel that he would have lied about such a small claim," Catoe said. "I believed he was truthful, and I made the decision to pay him."

Barry ended up getting a check for over $3,200 even though the cost of repairing his car was only $2,200. But did Barry return the $1,000  difference to Metro? Hah! Barry told the Post, “The case is closed where I’m concerned.” And about his service to Metro? The Post reports, “In three years, he has attended nine of 165 Metro committee and Board meetings.”

Has Metro’s chairman of the Board taken Barry to task for missing 95% of the meetings? Well, you’ll have to ask Arlington County Board member Chris Zimmerman, current chairman of this year’s Metro board.

And this same Metro board wants the federal government to give them $1.5 billion over the next ten years, as noted in this E-Newsletter from the office of Rep. Jim Moran (D-VA). Should we trush them with $1.5 billion if we can't trust them with $3,200? To paraphrase Fox News, "We report, you decide!"

June 14, 2008

Another Government Scheme to Redistribute Your Income

On Monday, we growled about Virginia’s method of redistributing your income in order to achieve education equity among Virginia’s 130+ school districts. And we often growl about Arlington County’s so-called “revenue sharing agreement” whereby the Arlington County Board has put school budgeting on auto-pilot.

Now comes a tale about inequities in the federal highway and transit program. According to this “backgrounder” by Ron Utt of the Heritage Foundation:

“Among the many flaws in the federal highway and transit program are the pervasive regional inequities in the way that federal highway spending is distributed among the 50 states, the District of Columbia, and five territories. Under current law, motorists and truck owners pay a federal fuel tax--18.3 cents per gallon on gasoline and 21 cents per gallon on diesel fuel--into the highway trust fund, which returns these fuel tax reve­nues to the states for their highway and transit projects . . . (h)owever, as annual U.S. Department of Transportation (USDOT) data reveal, many states were shortchanged, while others--notably Alaska and the District of Columbia--received far more in return than they put into the trust fund.”

Utt goes on to note there are more losers than winners, writing:

“While trust fund revenues reflect actual tax pay­ments made by motorists in each state, spending allo­cations to the states from the trust fund are determined by a mathematical formula that attempts to measure "need" based on several quantitative measures (e.g., miles of road and number of licensed drivers). In fact, the system embodies a number of inexplicable inequities that transfer billions of dol­lars from states in the South and the Midwest to the Northeast, the Mountain West, and Alaska.”

Well, what about Virginia’s taxpayers, you ask? Look at Table 1 in this Heritage Foundation “backgrounder,” and you will find that in FY 2005, Virginia made 2.936% of the payments into the federal highway program, but saw a return of only 2.507% (a ratio of 0.854). On the other hand, our neighbors in the District saw a far greater return since their ratio for FY 2005 was 4.328. Over the lifetime of the federal highway program, Virginia saw a much better return with a ratio of 0.980, but the return ratio for the District  was still distorted in their favor (3.710).

The biggest loser over the life of this program (1956 -- 2005) was Texas (return ratio of 0.797), followed by Oklahoma (0.823), South Carolina (0.826) and Michigan (0.831).

Utt provides a number of dos and don’ts for fixing the inequities in the system. With the current law not due to expire until September 2009, Utt writes:

“there is an opportunity for some Members of Congress to step forward on behalf of beleaguered tax-paying motor­ists and introduce legislation that will redirect the motorists' taxes to projects that enhance mobility and promote economic prosperity.”

Let’s hope so!

June 13, 2008

Another Slush Fund in Richmond?

A draft report was released on Monday by the Virginia General Assembly’s Joint Legislative Audit and Review Commission (JLARC) on “mitigating the costs of substance abuse in Virginia.” The first two key findings in the report are:

  • “The adverse effects of substance abuse cost State and local governments approximately $613 million in 2006, affecting many State agencies but disproportionately impacting the public safety area. To mitigate these effects, the State and localities spent $102 million providing substance abuse services.
  • “Most populations that completed substance abuse programs evaluated for this study imposed lower net costs on the State and localities, and the majority experienced better recidivism and employment outcomes than similar groups who either did not enter or complete treatment. While this analysis should be supplemented by ongoing evaluations, few Virginia agencies conduct assessments to determine the effectiveness of their treatment programs.”

Despite those key findings, however, Chris Jenkins of the Washington Post reported yesterday that:

“Nearly $18 million earmarked for substance-abuse services in Virginia was diverted to other programs in 2006, a state audit has concluded.”

So what’s going on, you ask. According to the JLARC report:

“While the State budget directs the Department of Alcoholic Beverage Control (ABC) to transfer funds for the care of substance abusers, the amount appropriated to Virginia agencies for the specific purpose of providing substance abuse services is approximately $18 million less than ABC transfers. Since at least 1976, the Virginia General Assembly directed the Department of Alcoholic Beverages Control to transfer a portion of its profits to defray expenses incurred for the “care, treatment, study, and rehabilitation of alcoholics by the Department of Mental Health, Mental Retardation and Substance Abuse Services and other State agencies.” In fiscal year 2006, the amount to be transferred by ABC into the pool of General Funds for this purpose reached $72.6 million. Yet, an analysis conducted for this study shows that the State spent approximately $55.0 million on substance abuse treatment during this period, or approximately $17.6 million less than ABC transfers. This discount suggests that nearly $18 million intended for substance abuse treatment is being used for other purposes.”

As Jenkins reported, “Several lawmakers on the commission said that the report raises important questions but that they need to try to figure out where the money went before making any determinations.” Bingo! Not to mention, of course, the following reporting by the Post:

“Last year, the state budgeted $9 million to pay for Medicaid patients to access substance-abuse programs. But the report found that the state had billed only about $120,000, or 1 percent of the projection, indicating that many addicts might not be accessing treatment they are eligible to receive.”

While finding out what happened to the $18 million slush fund, lawmakers should also determine why the state is spending only 1% of the $9 million budgeted for these patients. So, does the state really have a $27 million slush fund? Ask your state senator or delegate.

A set of presentation slides is available at JLARC's recent reports webpage

June 12, 2008

Buying a Pig in a Poke

ACTA has long contended that Arlington County taxpayers are getting ordinary services for extraordinary prices. That assertion was born out again by a story in today’s Alexandria-Arlington weekly section of the Washington Post, which took “a closer look at area rates of graduation.” The Post story began:

“Although high schools in the Washington region are showing steady improvement on measures such as Advanced Placement testing and end-of-course exams, that success might not be translating to higher graduation rates, according to the latest data from a Bethesda nonprofit group that is a leading authority on high school completion rates.

“The official graduation rates published by states and school systems are widely regarded as inflated and unreliable. Many in the field have come to rely instead on the annual Diplomas Count report from Editorial Projects in Education, publisher of the trade newspaper Education Week.

“The report estimates how many students in ninth grade graduate on time with their class, using a series of calculations that measure attrition from one grade level to the next.”

The Post warned, however,that:

“Because the numbers are dated, they are of limited use in assessing how well the school systems are doing now. But after three consecutive reports, the Diplomas Count effort gives a good glimpse of trends in the middle of the decade.”

Since the Post provided only the graduation rates for 2003, 2004, and 2005, we have supplied the cost-per-student for 2006 (from the earliest WABE guide available  on the APS website) in order to provide an economic frame of reference for the graduation rate performance. Here are just a few of the numbers:

                                Graduation Rate/Cost-per-Student

    • Arlington                75.7/$14,464
    • Alexandria              71.5/$15,871
    • Fairfax                   79.9/$11,915
    • Loudoun                  92.9/$11,379
    • Prince William          68.0/$9,374

While not a perfect picture that Arlington’s taxpayers are not getting their tax dollars worth, it’s still an indication that management of Arlington’s public schools need to do a better job of making school finances more transparent. A step in the right direction would be for the School Board to call for a school division efficiency review, which are performed by a third-party, and paid for by the Commonwealth. More than 30 Virginia school divisions' reviews have been completed to determine how wisely tax dollars are spent. More importantly, the three newest School Board members have pledged that they support such reviews.

June 11, 2008

Stick A Fork In The NVTA

Today’s DC Examiner contains a piece by Dan Genz that reports about the whining coming from the Northern Virginia Transportation Authority (NVTA). That would be the folks who imposed unconstitutional taxes on the public, then fought the public to preserve them, then rushed to reinstate them but dragged their feet on refunding them. Just my humble opinion, but they should be in jail rather than in public office. According to the Examiner, NVTA:

“is preparing for two extremes — an influx of hundreds of millions of dollars for new transportation projects or a near-complete shutdown.

“The first assumes a special General Assembly session will raise taxes to pay for transportation projects. That would require $1.2 million for the NVTA to hire six staff members and administer hundreds of millions of dollars in new road and rail improvements across the region.

“The other option uses about $350,000 to pay off debts and close shop, assuming the General Assembly is unable to replace the $336 million in tax dollars the Virginia Supreme Court ruled unconstitutional in February.”

Virginia taxpayers already pay taxes for the Virginia Department of Transportation (VDoT) so perhaps the NVTA chairman, who is quoted by Mr. Genz, could explain why we need an unelected body (i.e., the NVTA) to do what taxpayers should expect from VDoT.

June 10, 2008

And Some Pols Want to Nationalize Healthcare?

Yesterday’s Washington Post announced the U.S. Senate voted “to privatize failing restaurants." The Post  article began by saying:

“Year after year, decade upon decade, the U.S. Senate's network of restaurants has lost staggering amounts of money -- more than $18 million since 1993, according to one report, and an estimated $2 million this year alone, according to another.

“The financial condition of the world's most exclusive dining hall and its affiliated Capitol Hill restaurants, cafeterias and coffee shops has become so dire that, without a $250,000 subsidy from taxpayers, the Senate won't make payroll next month.

“The embarrassment of the Senate food service struggling like some neighborhood pizza joint has quietly sparked change previously unthinkable for Democrats. Last week, in a late-night voice vote, the Senate agreed to privatize the operation of its food service, a decision that would, for the first time, put it under the control of a contractor and all but guarantee lower wages and benefits for the outfit's new hires.

“The House is expected to agree -- its food service operation has been in private hands since the 1980s -- and President Bush’s signature on the bill would officially end a seven-month Democratic feud and more than four decades of taxpayer bailouts.”

Rep. John Campbell (R-CA), blogging at Green Eyeshade, wrote:

“Senator Feinstein (D-CA), blames the poor quality of food, but I am inclined to believe, as is the case in many government endeavors, the lack of entrepreneurial incentive contributes to poor food quality, high prices, and eventually the need for more government subsidy.”

And the panjandrums in Congress, not to mention presidential candidates, think they can manage America’s healthcare system and increase the regulatory burden on industry through "cap-and-trade," Amazing!

June 09, 2008

Income Redistribution, Virginia Style

The Constitution of Virginia requires that Standards of Quality (SOQ) for school districts “be determined and prescribed” from time to time, and “be determined and apportioned  by the General Assembly between the State and local units of government,” according to a special report by the General Assembly’s Joint Legislative Audit and Review Commission (JLARC). (Your choice of Summary, Briefing slides, or full report)

The summary document concludes by saying:

“Based on data reviewed for this report, in FY 2007 the State expended $5.03 billion from SOQ accounts. The major accounts constituting the bulk of these funds were basic aid ($2.95 billion) and State sales tax ($1.14 billion). The amount of State SOQ spending equated to an average of about $4,229 per pupil. The range in State SOQ spending in individual divisions was from $2,064 to $6,827 per pupil. An important factor in the varying size of State SOQ per-pupil spending levels in school divisions is the State’s use of a local ability-to-pay index in determining State and local shares of SOQ costs.”

As the saying goes, though, the devil is in the detail so turn to the full report with Table 8 and Appendix B providing the most interesting details for Arlington taxpayers. In Table 8, the first thing to note is that Arlington is one of only seven districts with a “composite index” of 0.8000. According to the report, the index “is a measure of local ability to pay” and “has a major impact” on the dollars “received by a school division.” As a result of its high “composite index,” the Arlington school district ranks fifth lowest in the amount of State SOQ funds it receives, which in FY 2007 was $2,275 per pupil. (emphasis added)

On the other hand, two school districts had composite indices below 0.2000 -- Lee (0.1769) and Scott (0.1962). As a result, the amounts they received from State SOQ funds were $6,827 and $5,926, respectively.

Is the current SOQ allocation process “fair and equitable?” We growled on September 23, 2007, about the “so-called biennial re-benchmarking of the education Standards of Quality (SOQ).” Instead of the current allocation method, we suggested the State use the one in a Claire Booth Luce study, which made more common sense.

June 08, 2008

Mark Twain Was Absolutely Correct

According to Twain, “No man’s life, liberty, or property are safe while the legislature is in session.” In fact, he may have been dreaming about the effort currently underway in the U.S. Congress to provide a tax break for trial lawyers (the Senate story is in the editorial of the weekend edition of the DC Examiner while the House story is in the June 6 Friday Digest of the PatriotPost.US).

According to the PatriotPost:

“a bill passed by the House last week contains a special tax perk for trial lawyers—one of the largest contributors to Democrat campaigns. Buried in the Energy and Tax Extenders Act of 2008 is a provision, offered by House Ways and Means Chairman Charlie Rangel (D-NY), which would let trial layers deduct the up-front expenses they incur while chasing ambulances—er, filing contingency-fee lawsuits—whether or not they anticipate future reimbursements for these expenses. Under current law, these expenses, deemed “loans” to clients, are deductible only if not repaid. Rangel’s Reward would allow lawyers to claim deductions now and, in essence, defer tax payments until they receive reimbursements—which, as we know from watching infamous class-action lawsuits unfold, can take years.”

In addition, the Examiner editorial points out:

“The bill previously passed the House without the usual notice to the Treasury Department for an official analysis of its provisions. The rush to judgment in both chambers of Congress, otherwise known as cramming it down opponents' throats, is objectionable. The trial-lawyer tax break is appalling. Together, they are an outrage.”

The editorial concludes by saying:

“It’s a sorry spectacle. (the preceding sentence appears only in the print edition) The good news is that Republican Senate Finance Committee member Michael Crapo of Idaho is promising "a partisan fight on the floor," and probably a filibuster. The bad news is that his objections are focused on procedural abuses and, bizarrely, on the Democrats' plans to find other savings to "offset" the cost of the bill. In short, nobody seems focused on the trial lawyer payoff. But it is that special-interest payoff by itself that merits a filibuster. If that provision remains in the bill, the whole thing deserves to be killed.”

The cost to taxpayers for this "sorry spectacle" for a favored special interest? Why, just $1.575 billion, according to the Examiner editorial. (emphasis added)

June 06, 2008

Why Market Solutions Are Better

And not just a little better, but much better than government solutions. In what must be one of the shortest and clearest descriptions of the truth of that assertion is provided today by economics/finance professor Mark Perry at Carpe Diem.

First, he provides these six “coercive, government solutions to high energy prices:”

  1. “Investigate oil companies for ‘price gouging.’
  2. "Impose windfall profits taxes on oil companies.
  3. “Keep plentiful domestic energy resources off-limits.
  4. “Pressure (beg) Saudi Arabia to increase output.
  5. “Regulate stricter CAFE standards for fuel efficiency.
  6. “Waste taxpayer money to subsidize ‘demon ethanol.’”

Next, he lists four “voluntary, market solutions:”

  1. “Producers develop fuel-efficient cars like the 300 mpg Aptera . . . that can go cross country on one tank of gas, and the 230 mpg Volkswagen coming in 2010”
  2. “Consumers drive less voluntarily and buy more fuel-efficient cars to conserve gas.”
  3. “Producers attempt to find more oil in Canada, North Dakota, the Outer Continental Shelf and ANWR, subject to government restrictions.
  4. “Oil refiners attempt to build more, energy-efficient, environmentally-safe oil refineries, subject to government restrictions.”

The choice between "market solutions" and "government solutions" sure seems like a "no-brainer." Why anyone would choose to trust government to solve most problems is beyond me. Perry also provides a nice video of the Aptera should you want to begin thinking of placing your order.

June 05, 2008

Navy Chiefs and Virginia’s Budget

Are Virginia’s governor and legislators spendthrifts, and do they have “country-club ways?” Those questions were asked by Robin Beres, a columnist in Sunday’s Richmond Times-Dispatch who writes:

“Virginia's governor and legislature -- who are also charged with living within the means given them by taxpayers -- could both use a good sit-down with a chief. However, the Navy is busy fighting a war at the moment and most of our chiefs are far too busy to discuss finances with fully grown men and women who should know better. Therefore, it is up to the citizens of this commonwealth to help educate our elected officials in the ways of fiscal responsibility.”

Ms Beres suggests starting with the state budgets, which you can find at the website of the Virginia Auditor of Public Accounts, specifically the lavish parties. She writes:

“As the chief would tell young Horntooter, when presented with a tight budget, one of the first things that should be cut are lavish parties. This might be an idea that the Commonwealth of Virginia could suggest to some of its charges. Two of the commonwealth's largest universities spent nearly $3 million in catering services through the first three quarters of the 2008 fiscal year.

“In FY 2007, various universities and colleges spent nearly a quarter of a million dollars at The Jefferson Hotel. One local institute of higher education spent more than $30,000 with the Country Club of Virginia. Even if a portion of that money is recouped, aren't these mighty swanky expenses to bill a state struggling to find money to build and maintain roads? And while one can appreciate the need for colleges and universities to interact and entertain, is it really necessary to maintain lavish boxes at football games with opulent, catered feasts fit for kings?”

In her conclusion, Beres includes this sage advice:

“Virginia taxpayers should insist that Gov. Tim Kaine let us know exactly what his plans for solving the transportation crisis are before we fork over millions of dollars in additional fees and taxes.”

HT Tertium Quids