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March 31, 2010

Will They Put Up Their Own Money?

At the Arlington County Board’s tax rate hearings last Thursday, March 25, several Arlington citizens urged the Board to raise the real estate tax rate advertised by the Board in February rather than by the real estate tax increase, which the Acting County Manager included in her proposed FY 2011 budget, or even better, no increase in the real estate tax rate. They were seeking to plunder Arlington taxpayers in order to redistribute wealth to such liberal causes as affordable housing.

In her proposed FY 2011 budget, the Acting Manager precisely followed the Board’s budget guidance and proposed a budget with a tax rate increase of 6.7 cents (7.7%). However, the Board listened to the special interests, and advertised a rate that would raise the real estate tax rate by 9.0 cents (10.3%).

Well, Barbara Hollingsworth, local opinion editor at the Washington Examiner, reminds us in a “Beltway Confidential” piece about Virginia’s Tax Me More Fund that was set-up in 2002 through the efforts of Virginia  Delegate Kirkland Cox (R-Colonial Heights). The idea was to provide those complaining the most about budget “cuts” with a place where they could make donations to Virginia’s General Fund. I’m sure Arlington County would be more than happy to accept donations to Arlington’s general fund.

Hollingsworth concludes that since Virginians donated only $1,500 to supplement a $74 billion 2008-10 biennial budget, Virginians must “think they’re already taxed quite enough.” Likewise, we think that those Arlingtonians who urged the Board to raise the taxes of Arlington’s taxpayers will not “put their own money where their” mouths are and make voluntary contributions to the county.

Thanks Barbara for reminding us about Virginia’s “Tax Me More Fund.”

March 30, 2010

Labor Unions, Collective Bargaining, and Taxpayers

In a new Tax & Budget Bulletin (requires Adobe), Chris Edwards. Director of Tax Policy Studies at the Cato Institute writes about the growth of public-sector labor unions. He begins by saying:

“Labor unions play a diminishing role in the private sector, but they still claim a large share of the public-sector workforce. Public-sector unions are important to examine because they have a major influence on government policies through their vigorous lobbying efforts. They are particularly influential in states that allow monopoly unionization through collective bargaining.

“Collective bargaining is a misguided labor policy because it violates civil liberties and gives unions excessive power to block needed reforms. To provide policymakers with greater flexibility and to improve government efficiency, states should follow the lead of Virginia and ban collective bargaining in the public sector.”

The union member share of employment in the private sector has grown from over 30% in 1965 to under 10% today. On the other hand, the share of union employment in the public-sector has hovered just below 40% for most years since 1985. The share of public employment in state and local government ranges from a high of 71% in New York and Rhode Island to a low of 8% in North Carolina. In Virginia, it’s 11%.

Edwards concludes this very informative bulletin by saying:

“To put citizens and taxpayers back in control of their governments, collective bargaining and forced union dues should be outlawed in the public sector. Public employees should be free to join worker associations, but they should not be given a special legal status and handed extra power to block desperately needed fiscal reforms. “

Wise advice indeed!

UPDATE (4/5/10): Chris Edwards blogs at Cato@Liberty today providing additional evidence, which shows  that "as the union share (in state/local government) increases, a state tends to have a higher government debt load." He then adds, "The correlation is likely caused by the fact that unionized government workers are powerful lobby groups that push for higher government-worker compensation and higher government spending in general."

March 29, 2010

How the $938 Billion Health Care Bill is Financed

The Tax Foundation has the details on the financing for the recently passed health care bill (aka ObamaCare) that was passed late Sunday evening, March 21, 2010. According to a press release last week, they write:

“The $938 billion health care reform legislation finalized by Congress yesterday is financed primarily through net cuts to Medicare and an increased Medicare tax on high-income taxpayers . . . “

“The Medicare spending cuts would save $416.5 billion, or about 39 percent of the bill's 10-year cost. The increased Medicare taxes on high-income people -- including an additional 0.9% Medicare Hospital Insurance Tax on earned income exceeding $200,000 for single taxpayers ($250,000 for married couples) and an "Unearned Income Medicare Contribution" of 3.8% on investment income for taxpayers with adjusted gross incomes (AGI) in excess of $200,000 for single filers ($250,000 for married filers) -- would raise $210 billion, or about 19 percent of the legislation's cost.”

The graph below is from the Tax Foundation’s website. The remaining financing sources that comprise the $938 billion cost estimate scored by the Congressional Budget Office (CBO) are here. We will provide a separate post in a few days from citing others who think the CBO significantly understated the cost estimate.

 

Other Resources: A different view of health care financing can be found in this timeline (requires Adobe) showing when major provisions provisions; it is from Rep. David Camp (R-Michigan, Ways & Means Committee ranking member. Here is a nice list from Sweetness and Light, which shows how Virginia’s representatives voted. Here is the link to the Congressional Budget Office's cost estimate for the "final health care legislation."

March 28, 2010

Thought for the Day

"Civilization is not inherited; it has to be learned and earned by each generation anew; if the transmission should be interrupted for one century, civilization would die, and we should be savages again."

   ~ Will and Ariel Durant

HT Thomas Sowell

March 27, 2010

The VAT in Our Future?

"As the night follows the day, the VAT cometh..

"With the passage of Obamacare, creating a vast new middle-class entitlement, a national sales tax of the kind near-universal in Europe is inevitable.

"We are now $8 trillion in debt. The Congressional Budget Office projects that another $12 trillion will be added over the next decade. Obamacare, when stripped of its budgetary gimmicks -- the unfunded $200 billion-plus doctor fix, the double counting of Medicare cuts, the 10-6 sleight-of-hand (counting 10 years of revenue and only 6 years of outflows) -- is at minimum a $2 trillion new entitlement.

"It will vastly increase the debt . . . ."

    ~Charles Krauthammer

HT His RealClearPolitics Column, March 26, 2010

March 26, 2010

Pleas for Fiscal Restraint and More Spending

The Arlington Sun Gazette’s Scott McCaffrey reports on last night’s tax-rate hearing in an online story he posted today. Although the turnout was disappointing in comparison to the number that turned out the previous two evenings in support of their special interests, the turnout was larger than previous years. The speakers' comments ranged from those seeking more fiscal restraint by the Arlington County Board to those who urged the Board to approve every cent that was advertised.

McCaffrey summed up what is at risk this way:

“County Board members have advertised a 2010 real estate tax rate of 96.5 cents per $100 assessed value, up 9 cents - or 10.2 percent - from the current rate. Board members are slated to set a final rate on April 24; they can set the rate as high as the advertised figure, but could enact a lower rate.

“Despite the decline of assessed value of real estate over the past year, most homeowners would end up paying more over the coming year.

“A typical Arlington household will see its total annual bill for county-government services rise $235, to $6,286, under acting County Manager Barbara Donnellan’s proposed budget, a figure that would rise higher if County Board members push tax rates and fees beyond what the manager has proposed.”

It is not too late to tell the County Board to keep the rate at $87.5 cents per $100 of assessed value. Call the Board office at 703-228-3130 to voice your opinion on where the real estate tax rate should be set, or write them at:

    countyboard (at) arlingtonva.us

By the way, do those speakers who urge the Board to spend more, contribute to the Commonwealth's Tax Me More fund, or do they just want the Board to plunder the taxes of the rest of us? Just wondering!

March 25, 2010

Thought for the Day

"The greater Congress' ability to grant favors and take one American's earnings to give to another American, the greater the value of influencing congressional decision-making. There's no better influence than money. The generic favor sought is to get Congress, under one ruse or another, to grant a privilege or right to one group of Americans that will be denied another group of Americans."

    ~ Walter E. Williams

HT His March 24 Townhall Column

March 24, 2010

A Retort to Justice Oliver Wendell Holmes, Jr.

Those who look first to government to solve problems are fond of quoting the late Supreme Court Justice Oliver Wendell Holmes, Jr., who said, "Taxes are the price we pay for civilization."

Christopher Chantrill, writing yesterday at American Thinker, notes that Holmes also said, "I like taxes. With them I buy civilization." However, Chantrill admits that until now, he had "failed to come up with a retort to this challenge." But here's Chantrill's answer:

"No. Taxes are not the price of civilization. Taxes are the Cost of Compulsion. Taxing is just what governments do, all of them, from the grandest continental power to the meanest guerrilla band taxing the villagers in its jungle hideaway.

Now, that is pithy!

March 23, 2010

A Thought on the Health Care Legislation

"Politics in a democracy is transactional: Politicians seek votes by promising to do things for voters, who seek promises in exchange for their votes. Because logrolling is how legislative coalitions are cobbled together in a continental nation, the auction by which reluctant House Democrats were purchased has been disillusioning only to sentimentalists with illusions about society's stock of disinterestedness."

"Besides, some of the transactions were almost gorgeous: Government policy having helped make water scarce in California's Central Valley, the party of expanding government secured two votes by increasing rations of the scarcity. Thus did one dependency lubricate legislation that establishes others."

    ~ George Will

HT His March 23, 2010 Washington Post Column

March 22, 2010

Two Thoughts on Passage of Health Care "Reform"

First, John Taylor. president of Tertium Quids, reminds that the Stamp Act, which was the spark that eventually ignited the American Revolution, was passed on March 22, 1765. As the History Channel tells us:

“With the passing of the Stamp Act, the colonists' grumbling finally became an articulated response to what they saw as the mother country's attempt to undermine their economic strength and independence. They raised the issue of taxation without representation, and formed societies throughout the colonies to rally against the British government and nobles who sought to exploit the colonies as a source of revenue and raw materials. By October of that year, nine of the 13 colonies sent representatives to the Stamp Act Congress, at which the colonists drafted the "Declaration of Rights and Grievances," a document that railed against the autocratic policies of the mercantilist British empire.”

Second, the inimitable Mark Steyn concludes the post, Happy Dependence Day!, at National Review Online’s blog, The Corner, about the passage of health “reform” legislation:

“Longer wait times, fewer doctors, more bureaucracy, massive IRS expansion, explosive debt, the end of the Pax Americana, and global Armageddon. Must try to look on the bright side . . .”

And speaking of Congress, here’s a video of Rep. Tom Perriello (D-Virginia 5th) on Congressional “stealing,” actually admitting, “If you don't tie our (i.e., Congress’s) hands, we will keep stealing." (HT to Taxing Tennessean for the link)

March 21, 2010

The IRS in Your Health Care Future?

In a report prepared for (requires Adobe) House Ways & Means Committee ranking member Dave Camp (R-Michigan), we are told that the health care reform bill, scheduled to be voted on later this evening, “dangerously expands IRS authority.” The report’s executive summary provides the following highlights of what would be the new IRS authority:

  • IRS agents verify if you have “acceptable” health care coverage
  • IRS has the authority to fine you up to $2,250 or 2 percent of your income (whichever is greater) for failure to prove that you have purchased “minimum essential coverage”
  • IRS can confiscate your tax refund
  • IRS audits are likely to increase
  • IRS will need up to $10 billion to administer the new health care program this decade
  • IRS may need to hire as many as 16,500 additional auditors, agents and other employees to investigate and collect billions in new taxes from Americans
  • Nearly half of all these new individual mandate taxes will be paid by Americans earning less than 300 percent of poverty ($66,150 for a family of four)  
  • Finally, this SPECIAL EXEMPTION (capitalization in the original): Democrats prohibit the IRS from imposing these taxes and penalties on illegal immigrants.

So in addition to the death panels, what other wonderful things in health care reform do we have to look forward to? The entire report is short, only nine double-spaced pages, and is well-worth reading. Something to remember when you’re in the voting booth come the first Tuesday of November 2010.

HT to Norm Leahy blogging at Tertium Quids and Dan Mitchell blogging at International Liberty.

March 20, 2010

Kudos to Rick Santelli and the Tea Party Movement

If today’s Tea Party Movement had a birthdate, it would be February 19, 2009, and the birthplace would very likely be the floor of the Chicago Mercantile Exchange when Rick Santelli and the CME’s traders expressed their outrage over the mortgage fiasco. The caption accompanying the CNBC video of Santelli provides the context:

“CNBC's Rick Santelli and the traders on the floor of the CME Group express outrage over the notion they may have to pay their neighbor's mortgage, particularly if they bought far more house than they could actually afford, with Jason Roney, Sharmac Capital.”

The movement may have started earlier with the bailouts in late 2008, but it only seemed to go viral after Santelli’s expression of rage hit the Internet. With their beliefs centered on fiscal responsibility, limited government, and free markets, the Tea Party Movement leaders and their members deserve the gratitude of all Americans who believe in liberty and freedom. On very short notice, they put on the Rally Against the Government Takeover of Health Care today at noon at the U.S. Capitol.

Learn more about the Tea Party Movement. Contact ACTA or TaxPartyPatriots.org, or the many organizations associated with the Tea Party Movement. Use your ZIP code at Tea Party Patriots to find a tea party group near you. Also use the "events icon" at their website to find one near you.

March 19, 2010

If the money is there, Arlington Public Schools will spend it!

We’ve growled before about the so-called revenue sharing agreement (RSA) between Arlington’s County Board and School Board that allows the School Board to avoid accountability over the tax revenues entrusted to them, e.g., February 16, 2009 and June 7, 2009. Because the RSA computes the “county transfer” according to a predetermined formula rather than upon the determination of need, there is no accountability (for details of the RSA, see item E.3. on the School Board’s 11/5/09 agenda).

The lack of School Board accountability is manifested in historical numbers that staff provided to the County Board at their March 9 budget work session. For the schools, one of the columns contained cost per pupil data for FY 1998 through FY 2011 that you can access here.

The cost-per-pupil for FY 1998 was $9,330 while the cost per pupil will be $17,942 for FY 2011 that begins July 1, 2010. Using the U.S. Department of Labor’s CPI inflation calculator, we learn that if the School Board had maintained the cost per pupil to no more than the the rate of inflation, Arlington County taxpayers would see a cost per pupil of only $12,406 rather than $17,942, a difference of $5,536. For the 20,933 students expected to enroll in the fall, APS will receive a windfall of over $115 million in FY 2011.

While the School Board can undoubtedly explain where some of the $115 million is spent, e.g., lower class size, Arlington County taxpayers need a better system of accountability from the Arlington Public Schools. However, the question is how much more productive are the Arlington Public Schools because of the $115 million windfall?

March 18, 2010

How High Must Federal Tax Hikes Go?

In a new study released last week (Fiscal Fact 217, March 12, 2010), the Tax Foundation says “federal spending so high that even prohibitive income tax hikes would not balance budget. In the lede paragraph of the related press release, the Tax Foundation writes:

“Federal income tax rates would have to be more than doubled across the income spectrum if Congress were to close the deficit in fiscal year 2010, according to a new report from the nonpartisan Tax Foundation. Instead of taxing joint filers with rates ranging from 10 percent to 35 percent, tax rates would have to start at 24.3 percent and reach up to 84.9 percent.” (emphasis added)

William Ahern, the Tax Foundation’s director of policy and communications introduces the study by saying:

“As usual, the one number that everyone talks about is the budget deficit, and sober, nonpartisan fiscal experts are agog at the Administration's toleration of previously intolerable deficits. Everyone has a slightly different idea of how high the federal deficit can be in an ordinary year and still be "sustainable," but in recent testimony to Congress, Federal Reserve Chairman Bernanke said that the structural deficit was sustainable at 2.5 to 3 percent of GDP.

“At no point in the next ten years, according to the Obama Budget, will the deficit ever shrink to as little as 3 percent of GDP. According to the CBO, it will never even get as low as 4 percent. And the dire deficit predictions of reliable nonprofit groups like the Pew Trust and Peterson Foundation are even more alarming: the deficit won't even shrink to 5.5 percent of GDP in their analysis.

“'Mind boggling' is the term Martin Sullivan of Tax Analysts uses to describe the tax and spending changes that would have to occur just to get the deficit down to 3 percent of GDP.

"Our gridlocked, dysfunctional Congress simply cannot bring itself to absorb these types of painful shocks," says Sullivan. "Given these unprecedented pressures I believe that within the next decade there is more than a 50-50 chance there will be an upheaval either of the political system or the economy."

Add that warning to Moody’s warning earlier this week, as reported by the Christian Science Monitor, March 16 “that it would consider downgrading the triple-A rating for US Treasury Bonds if Washington continues to pile up record deficits,” and you have to wonder why Congressional approval ratings haven’t hit zero.

March 17, 2010

War on Poverty: Abandoned and Forgotten

Except for a “must read” essay by Robert Rector, senior research fellow at the Heritage Foundation, at National Review Online, there was no reporting by the mainstream media yesterday marking the 46th anniversary of President Lyndon Johnson’s “War on Poverty,” announcing “a new government mobilization that he claimed would yield “total victory” against poverty in the United States.”

To explain just how large the War on Party was, Rector writes:

“Since the beginning of the War on Poverty, government has spent $16.7 trillion (in inflation-adjusted 2008 dollars) on means-tested welfare. In comparison, all the military wars in U.S. history have cost a total of $6.4 trillion (also in inflation-adjusted 2008 dollars).”

And what has our nation gained from this massive expenditure? Rector says:

“. . . When Lyndon Johnson launched his war, he declared that it would strike “at the causes, not just the consequences of poverty.” He added, “Our aim is not only to relieve the symptom of poverty, but to cure it and, above all, to prevent it.”

“In other words, President Johnson was not proposing a massive system of welfare benefits, doled out to an ever larger population of beneficiaries over time. In fact, Johnson declared that the War on Poverty would enable the nation to make “important reductions” in future welfare spending. Johnson’s goal was an increase in self-sufficiency: to create a new generation of individuals capable of supporting themselves.

“On one hand, it is true that, since the beginning of the War on Poverty, the material living conditions of the poor have improved; even the federal government cannot spend $16.7 trillion without having any impact whatsoever. But, in terms of reducing the “causes” rather than the “consequences” of poverty, the War on Poverty has failed utterly. In fact, a significant portion of the population is now less capable of prosperous self-sufficiency than it was before.”

Looking towards the future, Mr. Rector points out:

“The original goal of the War on Poverty — to reduce both poverty and dependence on government — has been abandoned and forgotten. While occasional lip service is sometimes still paid to reducing government dependence, ironically, this concept almost always appears as a justification for new government spending.

“The current goal in welfare is simply to “spread the wealth” for its own sake. The War on Poverty has become a system of permanent income redistribution, which will only increase over time.

“According to President Obama’s budget projections, federal and state welfare spending will total $10.3 trillion over the next ten years. This spending will cost more than $100,000 for each taxpaying household in the U.S. Most of it will be funded by borrowing from future generations and foreign nations.

“This spending is unsustainable. Our nation can no longer afford the War on Poverty spending colossus."

It may be abandoned and forgotten, but the federal worthies continue plundering America’s taxpayers. An essay worthy of inclusion in your "keeper folder."

March 16, 2010

Thought for the Day

 “Whatever amount is taken from the community in the form of taxes, if not lost, goes to them in the shape of expenditures or disbursements. The two--disbursements and taxation--constitute the fiscal action of the government. Such being the case, it must necessarily follow that some one portion of the community must pay in taxes more than it receives back in disbursements, while another receives in disbursements more than it pays in taxes. It is, then, manifest, taking the whole process together, that taxes must be, in effect, bounties to that portion of the community which receives more in disbursements than it pays in taxes, while to the other which pays in taxes more than it receives in disbursements they are taxes in reality - burdens instead of bounties. This consequence is unavoidable. It results from the nature of the process, be the taxes ever so equally laid. . . . The necessary result, then, of the unequal fiscal action of the government is to divide the community into two great classed: one consisting of those who, in reality, pay the taxes and, of course, bear exclusively the burden of supporting the government; and the other, of those who are recipients of their proceeds through disbursements, and who are, in fact, supported by the government; or in fewer words, to divide it into tax-payers and tax-consumers.”

    ~ John C. Calhoun, 7th Vice President of the United States and U.S. Senator

HTs On Power.org, American Thinker

March 15, 2010

Arlington's County and Schools Going in Opposite Directions

On Saturday, March 13, we growled about those big spenders, the Arlington County Board, citing the “fiscal indicators” included in the Acting County Manager’s FY 2011 proposed budget. For example, bonded indebtedness has grown from $2,209 per resident in FY 2002 to $$3,514 in the FY 2011 proposed budget, but if the County Board had been fiscally responsible, and limited per resident bonded debt in line with inflation, the FY 2011 figure would have been $2,661 rather than $3,514.

Today, let’s look at other “fiscal indicators,” which are in section E of the Manager’s FY 2011 proposed budget. They show the County Board has actually been fiscally prudent in contrast to the really big spenders, i.e., the Arlington School Board. As evidence, consider two numbers:
  • County employees per 1,000 residents. In 2002, there were 19.1 county employees per 1,000 residents, but that number decreases to 17.8 employees in FY 2011.
  • School employees per 1,000 students. In 2002, there were 163.0 school employees per 1,000  students, but the number of school employees per 1,000 students increases to 186.4 students in FY 2011.

The bottom line? The county-side of Arlington County government is 6.8% more efficient and economical while the schools-side has become 14.4% less efficient and economical than it was in 2002. When the County Board and the School Board hold their joint budget work session (currently scheduled for Thursday, April 8 from 3:00 to 5:00 PM), will the County Board ask the School Board to explain why the Arlington Public Schools are now operating less efficiently and less economically than they were in 2002?

March 14, 2010

Two Thoughts for Today

“No man’s life, liberty, or property are safe while the legislature is in session.” (1866)

   ~ Mark Twain

“Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself.”

    ~ Mark Twain

HT OnPower.org

March 13, 2010

Big Spending Arlington County Board

If Arlington County taxpayers want to see just how much the Arlington County Board likes to spend their tax dollars, they can spend a few minutes with a calculator and the page labelled “selected fiscal indicators: FY 2002 - FY 2011” in section E, glossary and appendices, of the Manager’s FY 2011 proposed budget. In addition, taxpayers will need to be able to calculate inflation, e.g., using the handy U.S. Department of Labor’s “CPI Inflation Calculator”.

With those tools handy, taxpayers can compute how some of the indicators have changed from 2002 to 2010 based upon changes in population and inflation on a per capita basis. Several examples:

  • General fund spending. In FY 2002, general fund expenditures were $612.8 million, or $3,172 per resident. In the FY 2011 proposed budget , general fund expenditures are budgeted for $946.8 million, or $4,414 per resident. If the County Board had controlled general fund spending at the increases in population and inflation, spending per resident in the FY 2011 proposed budget would have been $3,821 per resident, or $649 less per resident.
  • Bonded indebtedness. In FY 2002, bonded indebtedness was $426.9 million, but will grow to $753.9 million in the Manager’s FY 2011 proposed budget. On a per resident basis, bonded indebtedness was $2,209 in FY 2002 and will be $3,514 in FY 2011. If the County Board had controlled bonding to grow no more than the rate of inflation, it would have grown from $2,209 per resident in FY 2002 to only $2,661 per resident in FY 2011, increaseing only $452 per resident rather than $1,305 per resident.
  • Total debt service as a percentage of General Fund Expenditures. According to the County’s own numbers, debt grows by 30%, going from 8.0% of General Fund expenditures in FY 2002 to 10.4% in the FY 2011 proposed budget.
  • Metro subsidy and debt service as a percentage of the General Fund. Again according to the County's own numbers, this percentage goes from 2.1% in FY 2002 to 3.1% in the FY 2011 proposed budget, an increase of 47%.

Time for a new set of five worthies?

March 12, 2010

Will Arlington County's Homeowner Grants Prove Eternal?

President Ronald Reagan, America’s 40th President, is famous for the following quote:

“No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we’ll ever see on this earth.”

Let’s first take at a bit of Arlington County budget history. In the County Manager’s message in the FY 2006 proposed budget, he told the County Board that because “Arlington is once again extremely fortunate to have a thriving economy that has resulted in high incomes, low unemployment, and increased values in all classes of property.” As a result of skyrocketing real estate assessments, the Manager told the Board, “Due to these increased property values, $33.6 million is recommended for tax relief,” which would create, among other measures:

“A new homeowners' grant program – equivalent to one-half cent -- to provide additional relief of approximately $500 to households earning $72,000 or less ($2.2 million).”

Well, now that the economy has gone south, you might think the Board would be ready to pull the plug on the homeowners’ grant program. But the Manager is only recommending reducing the program, writing in the welfare section (oops, the Human Services department) of the budget:

“The Homeowner Grant Program, which provides a grant to homeowners meeting income and asset requirements, will reduce grant awards from $600 to $300 for incomes up to $55,120, and from $300 to $200 for incomes up to $77,407.  In addition, there will be a reduction in the asset limit to $240,000 for all participants (the current limit is $340,000 depending on income level).

IMPACT:  Homeowners will receive less assistance to help with their real estate tax bills. In CY 2009 approximately 1,180 households received grants, with 52% receiving the higher grant amount.”

That would reduce tax support for the homeowner grants by $428,000, but why even continue awarding the grants when the economic reasons for initiating them no longer exist. Not to mention reducing staffing by as many as 4 FTE, which were hired in 2005 to process the paperwork submitted by grant applicants.

Will the Arlington County Board prove The Gipper wrong? Let’s hope so.

March 11, 2010

Hey, It’s Not Just The Real Estate Taxes Going Up

When the Arlington County Board voted to advertise an increase of 10.3% in the real estate tax rate on February 20, they also voted to advertise other increases such as increasing “parking ticket and other fines for nonmoving violations be increased by $10 per infraction” (an increase of 40% for a parking meter violation). After all, there has generally been “no increases to parking ticket fines in over a decade.” The Manager’s report to the Board advertising increasing fines by $10 was item 22.L. on the Board’s February 20, 2010 agenda.

The county issued nearly 229,000 tickets, and warnings, in FY 2009, and collected almost $7.4 million. According to the Acting Manager, the $10 would “generate $1,520,000 in additional revenue, which would be offset by $20,000 in so-called non-personnel costs.”

The additional revenue wasn’t included in the FY 2011 proposed budget, but was advertised “to allow the County Board additional flexibility with revenue decisions for the FY 2011 budget.” How thoughtful to provide the Board with additional flexibility? Serving the County Board. of course.

Tell the Board your thoughts on whether to increase not only the above fines, but also the real estate tax rate. Write them at:

    countyboard (at) arlingtonva.us

March 10, 2010

Number of “Nonpayer” Taxpayers Continues Increasing

A new Fiscal Fact (Number 214, including the associated press release) was published today by the Tax Foundation, and reports that a record number of people paid no federal income tax in 2008, “more than a third of all tax returns resulted in complete nonpayment; that is, people got back every dollar that was withheld from their paychecks during the year.” In addition, the study reports that “over 50 million “nonpayers” include families making over $50,000.

According to the study, “Nonpaying status used to be a sure sign of poverty or near-poverty, but Congress and the President have changed the tax laws to pull much of the middle class into the growing pool of nonpayers.”

The number of “nonpayers” averaged 21% from 1950 until 1990. Since 1990, however, that percentage has increased. The Tax Foundation writes:

“Since it was enacted in 1913, the income tax code has contained provisions that exempt low-income workers or greatly reduce their income tax burden. These provisions include the standard deduction, personal exemption, dependent exemption, and the earned income tax credit (EITC). Between 1950 and 1990, the percentage of tax filers whose entire tax liability was wiped out by these provisions averaged 21 percent.

“Since the early 1990s, however, lawmakers have increasingly used the tax code instead of government spending programs to funnel money to groups of people they want to reward. Credits have been enacted to subsidize families with children, college students, and purchasers of hybrid cars, just to name a few of the most well known. In terms of tax revenue, the most significant of these socially targeted credits was the $500 per-child tax credit enacted in 1997. The 2001 and 2003 tax bills doubled the value of the credit to $1,000 and added a refundable component.”

Here’s a graph of the growth from the Tax Foundation’s study:

Sure seems the time has come to reform the tax system!

March 09, 2010

What a Way to Run a Company

Or should we say Arlington County? There are still enough to growl about in the department budget reductions in the Manager’s FY 2011 proposed budget so let’s focus on those for the Department of Environmental Services. Again, the proposed reductions sound like things that could easily be accomplished within the authority of the County Manager. For example:

  • “Adjust STAR back-office” transit “efficiencies in operations and program management practices to improve the overall cost efficiency of the local transit program.” Management anticipates minimal customer impact.
  • Implement minor adjustments to route schedules and span of service on ART routes 61, 62, 51 and 53. Management again anticipates minimal customer impact.

Guess you don’t have to be efficient when it’s other peoples’ money you’re spending.

March 08, 2010

Getting Blindsided in the General Assembly

Norm Leahy has another great post at the Tertium Quids blog today, relating how one bill patroned by Arlington County Senator Mary Margaret Whipple (D) -- Senate Bill 452 -- got blindsided in the General Assembly. Sen Whipple’s SB 452 would have changed how retail sales and hotel taxes “are computed based on total charges or the total price paid for the use or possession of the room.”

Norm cites this Virginian Pilot story to ask whether the bill involved a tax hike based on the following:

“Whipple's legislation was directed at online hotel booking companies such as Orbitz and Expedia.com, which book rooms at discounted rates and resell them on the Web. They now pay retail sales and hotel occupancy taxes only on the discounted price they pay the hotel - not on what they charge the customer.

“That's not fair, Whipple reasoned: A customer who books a room directly with the hotel pays tax on the full retail rate. So the Arlington County Democrat introduced a bill, SB452, requiring that the tax be computed on the full price of the room. The measure would also mandate that the tax be clearly delineated on the customer's invoice.

“The bill was approved by the Senate, 40-0, and a House of Delegates subcommittee, 10-0, advancing it to the full House Finance Committee.”

And here’s where the blindsiding comes into play. Responding to one lobbyist who claimed a similar measure has levied such a tax, Sen. Whipple said:

“It is not a new tax," Whipple countered. "The question is, what amount is it levied on? It's not complicated. It's a tax on the retail value of the room. Virginia is losing tons and tons of money because of this loophole."

Norm notes the action of the lobbyists has some folks upset, specifically Arlington County Treasurer Frank O’Leary. Here’s how the Virginian Pilot describes it:

“Arlington Treasurer Francis O'Leary, who suggested the bill to Whipple, said the committee's action will cost Virginia and its localities some $33 million in lost taxes this year - $5 million in Virginia Beach alone - at a time when the state is scrambling to plug a $4 billion-plus hole in the budget and cutting hundreds of millions from public education and health care.

“This stinks," O'Leary said. "These people are stealing our money, and then when we try to get it back, they hire high-priced lobbyists to fight us."

Guess Mr. O'Leary wasn’t at the hearing discussed in yesterday’s Growls when the government officials and their lobbyist marched to the General Assembly to lobby against taxpayers’ interest. Of course, when Arlington taxpayers travel elsewhere, local government officials in those localities happily tell those taxpayers the  taxes collected from Arlington County travelers will reduce their taxes.

March 07, 2010

Your Taxes at Work -- Against You

Sal Iaquinto (R-Virginia Beach) patroned HB 570 in the 2010 Virginia General Assembly, which “would shift the burden of proof from the taxpayer to the assessor when a taxpayer appeals the assessment of real property or to a circuit court, and would remove the presumption that the assessor’s valuation of real property is correct.”

The bill passed the House of Delegates 86-13 on February 4, but was defeated in the Senate on a party line vote, according to Norm Leahy blogging at Tertium Quids.

Norm also provides a video that shows several local government officials, including an official from the Virginia Association of Counties (VACo) for which Arlington County taxpayers pay about $36,000 annually, “lobbying against the interests of taxpayers, or in this case, taxpaying property owners.” The bill has “fiscal implications,” which are spelled out in the Department of Taxation’s 2010 Fiscal Impact Statement:

“This bill would have no impact on state revenues. To the extent that shifting the burden of proof to the locality results in more appeals, this bill may increase the costs to localities of defending local tax appeals. To the extent that shifting the burden of proof to the locality results in more successful appeals, this bill may result in a decrease in local tax revenues.”

Although the shifting of the burden of proof may increase the cost of defending appeals, it’s seems the higher responsibility of the local government should be to correctly assess a taxpayer’s property. Consequently, it was disconcerting to watch local government officials lobbying against the interests of taxpayers.

While visiting the Tertium Quids blog, you can join the Tuesday Morning Group and/or signing up for the TQ Email Updates. And for anyone who believes the claim of the VACo lobbyist that the assessment process is "user-friendly," please contact ACTA.

March 06, 2010

Arlington County Taxpayers Poorly Represented in Congress

The National Taxpayers Union has released its 2009 ratings (requires Adobe) for the First Session of the 111th U.S. Congress. The voting study is based on every roll call vote (333 in the House and 227 in the Senate) that affects fiscal policy, i.e., “every vote that significantly affects taxes, spending, debt, and regulatory burdens on consumers and taxpayers.”

Both Virginia Senators Mark Warner (D, score of 11%) and Jim Webb (D, 13%) received an F grade. Scores less than 16% received an F, which NTU describes as Big Spender. The average score for Democrats in the Senate was 9% and the median score was 6%.

Arlington County’s other member of Congress, Rep. Jim Moran (D). also received an F with a score of 2%. In fact, Moran scored lower than Virginia Representatives Gerald Connolly (D) with 6% and Bobby Scott (D) with 4%. The Democratic average in the House was 8% and the Democratic median was 4%.

Communicate with your Congressional representatives:

  • Senator Mark Warner (D) -  write to him or call (202) 224-2023
  • Representative Jim Moran (D) -- write to him or call (202) 225-4376

March 05, 2010

Ah, Those Difficult Budget Reductions

When we growled on Wednesday of this week about the budget reductions being recommended by the Acting Arlington County Manager, we said that many of the individual reductions made you wonder why they weren’t made years ago, or at least aren’t implemented immediately. How about these two examples:

  • The Manager’s Office would eliminate one of the six issues each year of The Citizen. That plus reducing the number of brochures and flyers printed would save an estimated $27,180. Why not just  eliminate the cost of printing and postage, and send The Citizen electronically? For those few people who affirm they don’t have e-mail available, paper copies could be continued for a few more years. So instead of saving $27,180, Arlington’s taxpayers could save over $100,000 annually.
  • The Acting Manager proposes some “transit service adjustments,” -- described as “minor” and the impact as "minimal" -- to the “route schedules and span of service on ART routes 61, 62, 51 and 53.” These “minor” adjustments would save an estimated $54,000 annually. Why wait to implement them until FY 2011? Why not implement them immediately?

When it’s taxpayers money they’re dealing with, it must be difficult for the county worthies to act quickly.

For the complete list of proposed FY 2011 budget reductions, see the County Manager’s Message in the FY 2011 proposed budget.

March 04, 2010

Partying at the U.S. Department of Veterans Affairs

As the Washington Times editorial yesterday correctly points out, “Americans expect the nation to take care of our veterans, especially during war time when the needs of recently wounded warriors increase.” However, that has not been the case at the Department of Veterans Affairs where the Washington Times reports that “some bureaucrats are using their positions to enrich themselves.” According to a VA Inspector General report (requires Adobe), posted by Ducuticker, the Times’ editorial says:

“Forty-two heavily redacted pages detail the antics of Diane Hartmann, the VA's director of national programs and special events. In this role, her primary duty was to coordinate rehabilitative events for disabled veterans, but, according to the report, Ms. Hartmann had other interests. For example, Ms. Hartmann allegedly spent her work time coming up with strategies that would contribute to a successful grand opening event for a friend's new business. Among the files investigators say they found on her government-issued computer were marketing plans, invitation letters, mailing lists and advertising flyers for this private event.”

The Times editorial closes with:

“Most Americans would consider a salary of $155,500 (not counting bonus) to be a godsend, especially in such a troubled economy. Although she was making triple the median household income, that apparently wasn't enough loot for Ms. Hartmann. Investigators recommended that she be forced to pay back $26,704.48 in extra benefits she appropriated. That was the harshest penalty suggested.

“The scariest aspect of this story is how little coverage it has received. In official Washington, misconduct of this sort among so-called public servants is considered business as usual. Little thought is given to being responsible stewards of public funds. But if lying, destroying evidence and misappropriating public funds don't constitute a crime, then the laws need to be rewritten. Plundering government employees should, at the very least, be fired on the spot for putting themselves above their duty.”

Ah, the wonders of bureaucrats. And there are people who want Washington to run the nation’s health care system?

March 03, 2010

Budget Reductions in Arlington County’s Proposed Budget

We growled on Monday, March 1, about expenditures in the Manager’s proposed FY 2011 budget, noting the Manager provides a list of the 158 cuts, totaling $16.2 million, that would balance her proposed budget. The cuts include those less than $25,000 to those of $100,000 or more, not to mention they cover virtually all departments and constitutional offices. In addition, there is a list of so-called Tier II revenue options and cuts that are not part of  the proposed budget, but the County Board may include  in their adopted FY 2011 budget.

Let’s take a closer look at the cuts being proposed by the Manager. Some make you wonder why they weren’t made years ago. For example, “Reduce a number of non-personnel expenditure budgets in travel, operating supplies, memberships, training, telephones, unclassified services, postage, and operating equipment” in the Commonwealth Attorney’s office. Or eliminating “the planner position supporting the Neighborhood College program and the County Board’s Walking Town Meetings, and the non-personnel funds for Neighborhood College ($20,000).”

The two lists, which together run to 35 pages, are in the County Manager’s Message section at the beginning of the FY 2011 proposed budget, and can be found here.

March 02, 2010

Kudos to Kentucky Sen. Jim Bunning

Getting macaca'ed, and by the Washington Post, no less. According to Wikipedia, the term macaca "was at the center of a conttroversy during the 2006 United States Senate election in Virginia when it was used by the Republican incumbent, George Allen. Most Americans were unfamiliar with the term until continual media coverage revealed it to be a racial slur. Allen claims to be unaware of its racial context. Relating to the Allen controversy, "macaca" was named the most politically incorrect word of 2006 . . . ."

Today's Wall Street Journal explains why the Post has its panties in a bunch:

"The Senate tied itself in knots Monday as it tried to get around a single lawmakerl's objection to a spending bill, a showdown that has become emblematic of capital's partisan gridlock.

"Sen. Jim Bunning (R, Ky) again blocked a $110 billion bill that would have extended unemployment benefits and other programs after halting its progress last week. And on Monday, the impact of his blockade started biting, with the the expiration of benefits t o 100,000 peoplel and the suspension of 41 transportation projects across the country.

"Mr. Bunning is holding things up by objecting to a "unanimous consent" request to advance the bill quickly, a routine maneuver for moving legislation forward that requires all senators to go along."

The bottom line, according to a press release yesterday from Bunning’s office:
“There comes a time when 100 senators are for something that we all support. If we can't find $10 billion to pay for it, we're not going to pay for anything. We will not pay for anything fully on the floor of the U.S. Senate. Now, he said I only offered one way to pay for this. That's untrue. I offered more than one way. I negotiated with the Leader -- the Leader's staff, rather, and we had worked out two-week extension to $5 billion with a different pay-for. The debt that we have arrived at , even the head of the Federal Reserve Bank, Chairman Bernanke, said it's not sustainable. It's unsustainable. What does that mean to the American people, to the same people that are struggling to pay their bills, that are on unemployment, that could have been covered had the Baucus-Grassley bill been considered, and could have been covered not for 30 days but for three months?”
How, then, is the Post “macaca'ing” Sen. Bunning? Today’s Washington Post has three stories about Sen. Bunning’s efforts to get the Senate to pay for legislation it passes. They include a Dana Milbank column titled “Hurling beanballs at unemployment line” on page A2; a piece by Ashley Halsey III titled derisively “A Senate dissident’s maneuver keeps jobless, federal workers on the line” on page A13; and, third, in Joe Davidson’s Federal Diary column, the column is titled “Deficit hawk’s move puts brakes on DOT workers” on page B3. And here's a Post webpage with a video of Bunning and Senator Harry Reid "sparring." 

What Bunning is trying to do is to get Congress to pay for legislation it passes rather than add to the nation's debt and thus passing on the cost of the bill to our children and grandchildren. Unfortunately, that point seems lost on the Post’s elite reporters and editors.

For additional views on what Sen. Bunning is trying to do, here’s a National Public Radio story. In addition, Fox News reports a story with this subtitle: “Kentucky Sen. Jim Bunning, a lame-duck Republican whose gruff, irascible style even rubs his fellow party members the wrong way, is not only blocking an unpaid stopgap bill to extend jobless benefits, but also creating political theatre to the dismay of Republicans and to the delight of Democrats.” This ABC News story may be what originally stirred the pot.

HT WMAL 630 AM's Chris Plante

March 01, 2010

Spending in Arlington County’s Proposed FY 2011 Budget

On Saturday, February 20, the Acting Manager formally presented her proposed FY 2011 budget to the Arlington County Board. Her proposed budget followed closely the Board’s budget guidance last fall, which directed her to propose an FY 2011 budget no greater than the FY 2010 adopted budget and that any gap be equally divided “between proposed revenue increases and proposed expense/service reductions.” As a result, the $16.26 million revenue gap would be made up by a 6.7 cent increase in the real estate tax rate. In the end, the Board voted to advertise a real estate tax rate of $0.09 per $100 of assessed value.

The budget also contains $16.22 million in budget reductions. The Manager indicates that nearly every department, court and constitutional office is impacted. Eighty-seven positions are being eliminated, and no step increases or COLAs are being approved.

In public safety, some proposed cuts involve reducing community policing by 50%; reducing personnel staff;  and reducing other staff. The Sheriff’s department would reduce three deputy sheriffs and three non-uniform support personnel. In the Fire Department, the Manager proposes eliminating a heavy rescue unit, a liaison with OEM, and eliminating a deputy director.

The libraries will be open 372 hours a week, a reduction of 73 hours. Most branches will be closed one day each week. Park maintenance will be reduced. For further information on  proposed budget reductions, see the first section of the budget labelled the “County Manager’s Message.” Cuts are pretty evenly divided by dollar amount, including 40 under $25,000, 33 between $25,000 and $50,000, 42 between $50,000 and $100,000, and 33 over $100,000. In addition, there is a long list of so-called “Tier II” options, including 13 revenue options totaling $5.5 million and 20 expenditure options totaling $3.9 million.

Finally, it’s good to read that “funded FTEs” have decreased from 3,822 in the FY 2009 revised budget to 3,718 in t he FY 2010 revised budget to 3,623 in the FY 2011  proposed budget. Further information on proposed spending, as well spending reductions, is available at the Department of Management & Finance FY 2011 webpage. The graph below, from the DM&F website, shows the distribution of $941.8 million in general fund revenues and  expenditures.