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April 30, 2012

$1 Trillion a Year Fighting Poverty. And Failed!

Earlier this month, the Cato Institute published a policy study (.html version) of America's welfare state, and how America spends "nearly $1 trillion a year fighting poverty -- and fail." (Policy Analysis No. 694, April 1, 2012; requires Adobe). It was written by Michael D. Tanner, Cato's director of health and welfare studies. Below is the executive summary:

"On January 8, 1964, President Lyndon B. Johnson delivered a State of the Union address to Congress in which he declared an "unconditional war on poverty in America." At the time, the poverty rate in America was around 19 percent and falling rapidly. This year, it is reported that the poverty rate is expected to be roughly 15.1 percent and climbing. Between then and now, the federal government spent roughly $12 trillion fighting poverty, and state and local governments added another $3 trillion. Yet the poverty rate never fell below 10.5 percent and is now at the highest level in nearly a decade. Clearly, we have been doing something wrong.

"When most Americans think of welfare, they think of the cash benefit program known as Temporary Assistance to Needy Families (TANF), formerly known as Aid to Families with Dependent Children (AFDC). But in reality TANF is only a tiny portion of a vast array of federal government social welfare programs designed to fight poverty. In fact, if one considers those programs that are means-tested (and therefore obviously targeted to low-income Americans) and programs whose legislative language specifically classifies them as anti-poverty programs, there are currently 126 separate federal government programs designed to fight poverty."

If none of that shocks you, perhaps the following from the Introduction will?

"Indeed, federal welfare spending alone totals more than $14,848 for every poor man, woman, and child in this country. For a typical poor family of three, that amounts to more than $44,500. Combined with state and local spending, government spends $20,610 for every poor person in America, or $61,830 per poor family of three. Given that the poverty line for that family is just $18,530, we should have theoretically wiped out poverty in America many times over . . . ."

Imagine! The country spends the equivalent of $10 per hour ($20,610 divided by 2,080 hours) for every poor person. And be sure to check out the appendix, which provides the cost and number of participants for 126 welfare programs.

Welfare may not be as much of a fiscal problem as the federal entitlement programs such as Social Security, Medicare, and Medicaid, but as Tanner shows in this policy analysis, welfare is a program that must be fixed.

April 29, 2012

Is California the Nation’s Future?

The Daily Beast introduces Joel Kotkin’s essay by saying, “California’s slow-motion tragedy could end up as a national one, warns Joel Kotkin.” According to Kotkin:

“Barack Obama learned the rough sport of politics in Chicago, but his domestic policies have been shaped by California’s progressive creed. As the Golden State crumbles, its troubles point to those America may confront in a second Obama term.”

Kotkin then goes on to write:

“Obama regularly asserts that green jobs will play a crucial role in the future of the American economy, but California, a trend-setter in the field, has yet to reap such benefits. Green jobs, broadly defined, make up only about 2 percent of jobs in the state—about the same proportion as in Texas. In Silicon Valley, the number of green jobs actually declined between 2003 and 2010. Meanwhile, California’s unemployment rate of 10.9 percent is the nation’s third highest, behind only Nevada and Rhode Island.

“When Governor Jerry Brown predicted a half-million green jobs by the end of the decade, even The New York Times deemed it ‘a pipe dream.’”

He then compares job creation in California and elsewhere, writing:

“ . . . Well, Texas has created 200,000 oil and gas jobs over the past decade; California has barely added 20,000. The state’s remaining energy producers have been slowing down as the regulatory environment becomes ever more hostile even as producers elsewhere, including in rustbelt states like Ohio and Pennsylvania, ramp up. The oil and gas jobs the Golden State political class shuns pay around $100,000 a year on average.

“Instead, California has forged ahead with ever-more extreme renewable energy mandates that have resulted in energy costs roughly 50 percent above the national average and expected to rise substantially from there. This tends to drive out manufacturing and other largely blue-collar energy users."

Kotkin concludes his essay saying, “The increasingly delusional nature of the state’s politics . . . It’s hard to see how these policies, coupled with a massive income tax increase on the so-called rich (families, as well as many small businesses, making over $250,000), can do anything other than widen the state’s already gaping class divide. Yet given the power of Californian ideas over Obama, one can expect more such policies from him in an electorally unencumbered second term. California’s slow-motion tragedy could end up as a national one.”

The entire essay is well-worth reading. You may also enjoy reading last weekend’s interview in the Wall Street Journal where the Journal’s Allysia Finley talks with Kotkin “about what is driving the middle class out of the Golden State.”

And if you think Kotkin is off-base, consider the following question raised by Shannon Love at Chicago Boyz on November 1, 2008, almost exactly 3 1/2 years ago:

"One really has to ask the obvious question: If Obama’s economic policies work so well, why isn’t Detroit a paradise?

"In 1950, America produced 51% of the GNP for the entire world. Of that production, roughly 70% took place in the eight states surrounding the Great Lakes: Minnesota, Wisconsin, Illinois, Indiana, Michigan, Ohio, Pennsylvania, and New York."The productive capability of this small area of earth staggers the imagination. Virtually everything that rebuilt the industrial bases of Europe and Japan came from those eight states. Cars, planes, electronics, machine tools, consumer goods, generators, concrete – any conceivable item manufactured by industrial humanity poured out this tiny region and enriched the world. The region shone with widespread prosperity. People migrated from the South and West to work in these Herculean engines of industry.

"The wealth, power and economic dominance of the region at the time cannot be overstated. Nothing like it has existed in human history.

"Yet, a mere 30 years later, by 1980, we called that area the “rustbelt” and it became synonymous with joblessness, collapsing cities, high crime, failing schools and general hopelessness.

"What the hell happened?

"Obama happened.

"Of course, not Obama personally but rather the same ideas that Obama espouses. What those ideas did to the Great Lakes states, they can do to the entire country.

"What did they do wrong?"

Resource: You can read more by Joel Kotkin at his New Geography website.

UPDATE (5/18/12): A Reuters story posted at Breitbart's Big Government today reports in part:

"Republican presidential candidate Mitt Romney warned on Friday that the U.S. economy faced a huge fiscal hole and high taxes like the state of California if he did not win November's election against President Barack Obama.

"Seeking to keep his focus on economic issues, the comments were a departure for Romney, who usually holds up Europe's economic troubles, not California's, as an example of what could happen to the American economy.

"There are only two ways to go: Like America in the past," Romney said. "Or like California, where they raise taxes higher and higher and higher. They scare away employers ... and they have huge deficits," he said in a telephone town-hall meeting with voters from four swing states."

April 28, 2012

Arlington Public Schools Budget At $500 Million

At the Arlington School Board meeting on Thursday, April 26, 2012, the Board adopted its fiscal year 2013 budget. Here’s the motion that was passed, according to the “Boarddocs” webpage (Action Item F-1 on the School Board’ agenda):

“ . . . “consisting of a total of $499,977,853. Changes from the School Board’s Proposed FY 2013 Budget, adopted on March 22, 2012, are specified in Attachment A to this motion. The School Board’s FY 2013 budget requires an on-going county transfer of $398,901,963, a one-time county transfer of $6,938,050, a beginning balance or carry-forward of $11,475,000, and a carry-forward of $32,990,453 for the reserve fund.”

Here’s how Scott McCaffrey started his report that he posted yesterday at the online Arlington Sun Gazette:

“School Board members on April 26 tiptoed right up to the half-billion dollar mark, peering over the edge but not taking the final leap, in adopting a record-setting budget to fund operations for the year beginning July 1.

“The final budget total – $499,977,853 – was so close to a half-billion dollars that the addition of a single additional new teacher would have pushed it over the threshold.

“But that day may be close at hand. The adopted budget does not include an additional $1.9 million being sought from the county government to address compensation issues. If the funds are appropriated, the school system’s budget will total nearly $502 million.

“School Board Chairman Abby Raphael said she believed the county government, which has approved but sequestered the $1.9 million pending further study, will free up the money for schools.”

McCaffrey also writes of how the APS’ cost-per-student will change, reporting, “The per-student cost for the coming  year will be $18,615, up from $18,400 per student in Murphy’s budget proposal and up from about $18,110 this year. The fiscal 2013 per-student cost doesn’t factor in the anticipated $1.9 million in extra funds,” which would boost the cost-per-student to about $18,705. He also reports:

“School officials say the extra spending is needed to deal with rising enrollment, construction projects and increasing debt, and to provide both raises to employees and additional funds to compensate for the loss of state pension funding.”

If you want more details than McCaffrey’s reporting provides, visit the “Boarddocs” webpage for the April 26, 2012 meeting where you can read the budget resolution, the staff memo to the Superintendent outlining how the FY 2013 budget was balanced, a spreadsheet of budget changes, and a final FY 2013 budget presentation. In addition, you may want to compare the School Board's budget with the Civic Federation's Schools Committee's recommendation, which was $498,443, 238 (requires Adobe; begins after page 15).

April 27, 2012

More About Tax Fairness

On Tuesday, we Growled about tax fairness demagoguery, citing an Investor's Business Daily column by Walter E. Williams. Let's cover the issue of fairness and taxation a bit more, this time citing a February 21, 2012 column by Thomas Sowell in which he writes that "taxing the rich more doesn't make society fairer.

Sowell writes in part:

"Four years ago, TV interviewer Charles Gibson pointed out to candidate Barack Obama that raising capital gains tax rates had on a number of occasions led to less capital gains tax revenue being collected — and, conversely, lowering the capital gains tax rates had on other occasions increased the amount of capital gains revenue collected by the government.

"Obama readily admitted that. But he said that "fairness" justified a higher tax rate on "the rich."

"Yet how does a higher tax rate on paper, without a real increase in the amount of taxes actually collected, promote fairness?

"However, raising tax rates on "the rich" pays off politically, even if the government loses revenues when the rich put their money into tax shelters.

< . . . >

"Slippery talk about "fairness" is at the heart of this fraud by politicians seeking to squander more of the nation's resources."

Now, can we stop talking about fairness?

April 26, 2012

Thought for Today

"A ruling intelligentsia, whether in Europe, Asia or Africa, treats the masses as raw material to be experimented on, processed, and wasted at will."

~ Eric Hoffer, "The Temper of our Time, page 83

HT Thomas Sowell

April 25, 2012

And the April 2012 Porker of the Month is . . . .

Porker of the Month is a dubious honor given to lawmakers, government officials, and political candidates who have shown a blatant disregard for the interests of taxpayers.

Citizens Against Government Waste (CAGW) has named Representative Mike Rogers (R-Alabama) as its April 2012 Porker of the Month “for recommending that lawmakers bring back earmarks.”

CAGW explained giving the award to Rep. Mike Rogers this way:

“Rep. Rogers is hardly the first member to yearn publicly for the reinstatement of earmarks, but his claim that there was support for his position among House Republicans and House Speaker John Boehner (R-Ohio) may be considering a study of earmark reforms has raised the debate to a new and chilling level.  Visions of bridges to nowhere and teapot museums are dancing in the taxpayers’ heads, which could help remind them that pork has traditionally been one of the few areas of bipartisan agreement in past years and eliminate one of the advantages that Republicans have had over Democrats.

“Rep. Rogers’ contention that earmarks are essential to pass legislation is exactly how Republicans got in trouble after they took over the majority in 1994,” said CAGW President Tom Schatz.  “Earmarks exploded from $7.8 billion in 1994 to $29 billion in 2006, when Republicans lost the majority.  On a positive note, the congressman’s comments were reportedly met with jeers by freshmen Republicans, who helped regain the majority in the House in large part due to their vocal opposition to excessive spending and earmarks.  Any talk of earmark ‘reform’ will be viewed by taxpayers as abandoning those principles.”

“A larger problem for Rep. Rogers and the entire Congress is that the earmark moratorium has not worked as advertised.  On April 17, CAGW will roll out the 2012 Congressional Pig Book, which will demonstrate that earmarks have slipped into the appropriations bills.

“

Rep. Rogers and others who are calling for an earmark revival are swimming against the tide,” added Schatz.  “Taxpayers continue to support the moratorium, and would be even happier with a permanent ban on earmarks.

In conclusion, CAGW says that Rep. Rogers is surely only the latest in “a long line of squeaky wheels squealing for more grease. If you think CAGW’s selection of Rep. Rogers’ section as April’s Porker of the Month, call his office (202-225-3261), and tell him what you think about his idea to brink back earmarks.

April 24, 2012

Tax Fairness Demagoguery

In his weekly column that will be in tomorrow's Investor's Business Daily, the inimitable Walter E. Williams, discusses "devious taxation through currency debasement and borrowing, Williams comments on tax fairness, specifically the following three paragraphs:

"Instead of focusing on how the federal government has grown from 3% or 4% of our GDP — as it was from 1787 to 1920 — to today's 24%, our attention has been diverted to tax fairness demagoguery.

"Let's look at tax fairness. According to Internal Revenue Service data for 2009, available at http://www.ntu.org/tax-basics/who-pays-income-taxes.html, the top 1% of American income earners paid almost 37% of federal income taxes. The top 10% paid about 70% of federal income taxes, and the top 50% paid nearly 98%. Roughly 47% of Americans pay no federal income tax.

"Here's my fairness question to you: What standard of fairness dictates that the top 10% of income earners pay 70% of the income tax burden while 47% of Americans pay nothing?"

Since President Obama often talks of fairness or tax fairness, e.g., in his December 6, 2011 economic speech in Osawatomie, Kansas, will the answer to Professor Williams' question about tax fairness be forthcoming?

April 23, 2012

Is the Party Over for Global Warming?

At Marc Morano’s Climate Depot website, he “alerts” readers that:

“'Gaia' scientist James Lovelock reverses himself: I was 'alarmist' about climate change & so was Gore! 'The problem is we don't know what the climate is doing. We thought we knew 20 years ago'”

According to Morano, “MSNBC, perhaps the most unlikely of news sources, reports on what may be seen as the official end of the man-made global warming fear movement.” Morano also said:

“In 2007, Lovelock Predicted Global Warming Doom: 'Billions of us will die; few breeding pairs of people that survive will be in Arctic.’”

Here’s how MSNBC discusses global warming in Lovelock’s forthcoming book:

“The new book will discuss how humanity can change the way it acts in order to help regulate the Earth’s natural systems, performing a role similar to the harmonious one played by plants when they absorb carbon dioxide and produce oxygen.

“It will also reflect his new opinion that global warming has not occurred as he had expected.

“The problem is we don’t know what the climate is doing. We thought we knew 20 years ago. That led to some alarmist books – mine included – because it looked clear-cut, but it hasn’t happened,” Lovelock said.”

Since the Arlington County Board’s signature environmental project is the Community Energy Plan, not to mention the Board’s other environmental darling, Fresh AIRE are designed to reduce carbon emissons, will the County Board wizards pull the plug on these two vanity projects?

UPDATE (4/25/12): Thanks to Breitbart News' Big Government today for pointing out:

"Lovelock said that Al Gore’s “An Inconvenient Truth” and Tim Flannery’s “The Weather Makers” were similarly alarmist.

“All right,” he said, “I made a mistake.” He added of his 2006 book, Revenge of Gaia, in which his language was over-the-top, “I would be a little more cautious – but then that would have spoilt the book.”

"Thanks to alarmists like Lovelock, the Western world, including the United States, has undertaken massive regulation of its citizenry and increased taxation in order to help pay for probably unnecessary global warming measures. Leftists all over the globe have suggested that those who doubt man-made global warming are “flat-earthers,” and have silenced them in the halls of academia. As we’re finding out every day from scientists like Lovelock, that intellectual tyranny has been disastrous for debate, for scientific truth, for the world economy, and for overregulated citizens."

Timothy Birdnow, writing at American Thinker, says the Alpha Male of global warming "has just retreated." Birdnow explains it this way:

"Lovelock was wise to walk this back; too much of the evidence simply fails to justify the catastrophic vision of Global Warming theory.

"There is the matter of the missing heat which alarmists theorize is hiding at the bottom of the oceans. But they have no mechanism for this heat moving downward, something heat does not normally do, and cannot find it through deep-sea probes. While Arctic ice has been weak, it has reached a new high for recent years. Himalayan glaciers have stubbornly failed to melt and some have even grown. Worldwide precipitation has stubbornly failed to increase in a statistically meaningful way . There is no solid evidence that sea level rise has accelerated in recent years . Oh, and it hasn't warmed since Bill Clinton's first term in office."

Investor's Business Daily begins an editorial today saying, "Not many years ago, a celebrated scientist predicted a global warming disaster awaited humanity. Today, that same scientist admits his warning was too "alarmist." It's time Al Gore turned his limousine around, too."

April 22, 2012

Getting the National Debt Figures Straight

At CNS News on Wednesday, Terence Jeffrey reports that under President Obama, the debt has increased . . . $5,027,761,476,484.56 (for the record, that's just over $5 trillion). Here’s his report:

“In the 39 months since Barack Obama took the oath of office as president of the United States, the federal government’s debt has increased by $5,027,761,476,484.56.

“Although he has served less than a term, Obama is now the first American president to see the federal government's debt increase by more than $5 trillion during his time in office. (emphasis added)

“During the full eight years that George W. Bush served as president, the federal government's debt increased by $4,899,100,310,608.44. (Rising from $5,727,776,738,304.64 to $10,626,877,048,913.08.)

“The $5,027,761,476,484.56 that the debt has increased during Obama's presidency equals $16,043.39 for every one of the 313,385,295 people the Census Bureau now estimates live in the United States. (emphasis added)

“At the close of business on Jan. 20, 2009, the day Obama was inaugurated, the federal government’s debt was $10,626,877,048,913.08, according to the U.S. Treasury. By the close of business on April 16, 2012—as many Americans were working to finalize their 2011 tax returns to meet an April 17 filing deadline—the debt had reached $15,654,638,525,397.64.

“The $5,027,761,476,484.56 in additional debt that the U.S. government has taken on during the 39 months that Obama has been president is more debt than the federal government accumulated in the first 219 years of the Republic. (emphasis added)

“The total federal debt did not exceed $5,027,761,476,484.56 until March 14, 1996, when President Bill Clinton was in the last year of his first term in office. On that day, the national debt rose from $5,025,887,531,178.79 to 5,035,165,720,616.33.”

Unbelievable! Almost mind-boggling. But in as much as President Obama often talks about the Great Recession and the financial crisis he inherited, it's worth citing the debt numbers that Terence Jeffrey reports for CNS News.

April 21, 2012

Arlington County Board Adopts Budget, Raises Your Taxes

As we Growled on Thursday, the Board adopted a Fiscal Year 2013 budget today, and, as previously reported, chose to balance the budget by raising the real estate tax rate 1.3 cents per $100 of assessed value. Jason Spencer of the Clarendon-Courthouse-Rosslyn Patch started his report on the Board's budget adoption this way:

“County's $1 billion budget also bolsters tax support for affordable housing programs and restores library hours cut during recession.

“The Arlington County Board on Saturday unanimously approved a $1 billion budget that includes a 1.3 cent real estate tax increase.

< . . . . >

“The tax hike will cost the average Arlington County homeowner an extra $160 annually. The average assessed value of a home in Arlington is about $520,000.”

But hey, the Board showed Arlington homeowners they care. As the Patch reported. “(t)rash and recycling fees will be reduced by $32 per household.”

Spencer’s report includes a lot more of the gritty details. If you want more, you can read the county’s press release. Better yet, read the Arlington County Civic Federation's Revenues & Expenditures Committee's report (requires Adobe) to learn how they 'balanced the budget' with no increase in the real estate tax rate.

UPDATE (4/22/12): Always more needs, and if you don't believe them, just ask the County Board wizards. Here's how Scott McCaffrey reported it for the Arlington Sun Gazette this morning: "Board members said the increase was necessary to fund a host of needs, ranging from schools to public-safety. They included a pay raise for county employees – and themselves – in the package." But if the wizards made it bad for homeowners, consider the following:

"The tax-rate increase will hit owners of commercial properties hardest, as that sector saw an overall increase of 13.5 percent in assessed value this year compared to 2011. Owners of commercial property also pay a surcharge on their tax bills to fund transportation improvements."

UPDATE (4/22/12): The Washington Examiner's report is very short today, but Patricia Sullivan of the Washington Post reports on the budget in quite some detail, including:

"Describing the 1.3-cent tax rate increase as “modest,” Chairman Mary Hynes noted that the county has increased its budget for affordable housing by 75 percent over the past five years and intends to continue to do so. But her decision to study how the county funds its housing services created the first major fracture of her three-month-old chairmanship.

"Former chairman Chris Zimmerman (D) said that although the $8.6 million to be spent on housing initiatives was sorely needed, making a quarter of it a one-year-only grant was “a lost opportunity” to increase spending by more than $3 million next year and $10 million over the coming four years by pushing up the tax rate by another half-cent. But what really irked him was the proposal to study the county’s housing problem and policies.

“We understand the issue. We understand the dimensions of the problem. We’ve studied and studied. We’ve established goals and targets. We’ve reaffirmed them,” he said. He later added: “We don’t lack information about the magnitude of the problem. We don’t need to study whether cigarettes cause cancer or human activity causes climate change.”

"Hynes strongly defended the need to analyze the county’s approach and noted that the county will spend about 5 percent of its budget on housing in the coming year."

In addition, at the Post's The State of NoVa blog, Sullivan discusses "(w)hat a county budget really means." Especially interesting are the following:

"The fascinating ritual (we’re serious!) known as local government budgeting became even more intriguing Saturday when the normally unanimous Arlington County Board developed a rift over something they all agree upon — funding for affordable housing initiatives.

"Why are budgets fascinating? They are a watch-what-we-do moment, when all the rhetoric falls aside. Actions, as your mother told you, speak louder than words.

< . . . >

"We in the press usually focus on the cost of taxes to homeowners (and don’t forget, renters, the costs are passed on to you, too) but owners of commercial property also shell out for the services provided by local government. When the value of a property goes up, so does its taxes, even if there is no tax rate increase.

"Scott McCaffrey in the local Sun-Gazette rightly points out that the 1.3 cent tax increase may hit businesses the hardest since their assessed values rose 13.5 percent, and they also pay a transportation surcharge.

"All this may be more than the ordinary Arlingtonian cares to know about the budget (but there’s plenty more on the county Web site). But for those who watch closely, or depend on services, or like politics, or pay the bills, the spring ritual of budgeting can provide many hours of fascination."

April 20, 2012

Treasury Secretary Makes the Anti-Tax Case?

At the American Enterprise Institute's EnterpriseBlog, James Pethokoukis posted a great chart yesterday, and notes that U.S. Treasury Secretary Tim Geithner "inadvertently makes the case for anti-tax absolutism."

Pethokoukis specifically cited the following comment of the Treasury Secretary, which came from a Brokkings Institute "conversation" with Mr. Geither:

" . . .  make sure we’re not eroding what’s still a very thin safety net in the United States . . . ."

He then adds: "Always more. Never enough. Here’s a fun fact: Annual federal spending on Medicare, Social Security, income security, and various education and training programs—in inflation-adjusted terms—rose by 175% to $1.4 trillion from 1977 to 2007. Yep, a wafer-thin safety net." Here's the chart mentioned above that shows the "average amount of assistance per un- or under-employed individual under the age of 65" that shows average assistance increasing from about $9,000 in 2006 to about $15,000 in 2011:


But Pethokoukis says he "would be more tolerant of talk of 'a very think safety net' if he "hadn't just read" the following from an April 17, 2012 Wall Street Journal op-ed by Howard Rich, chairman of Americans for Limited Government (quote slightly different from his blog post, but is taken from the original Journal story):

"According to the Congressional Budget Office, between 1970 and 2009 the number of Americans receiving disability benefits more than tripled to 9.7 million from 2.7 million. This increase has dramatically outpaced the growth in America's working-age population. In fact, statistics from the U.S. Department of Labor show that since 1970 the pool of disability recipients has been growing at a rate twice as fast as the pool of potential workers.

"Driving this expansion is government's increasingly malleable definition of what constitutes a "disability." Currently, the SSA deems disabilities to be "total and complete" if applicants demonstrate that their impairments prevent them from earning at least $1,000 a month. But beginning in 1980 presumptions of disability began to be made based on age, education, work history and other mitigating factors. Four years later applicants were permitted to count the sum of multiple "nonsevere" impairments and count this as a "severe" disability.

"As a result, workers who complain of "persistent anxiety" and "chronic fatigue" are now viewed by the government as being disabled.

< . . . >

"Consider this: If the growth in America's "disability" pool had been confined to the same level as the growth in our working-age population over the last 40 years, the annual cost of this program would now total roughly $60 billion—not $125 billion.

"Sadly, our government has shown no appetite for reforming eligibility with regard to any of its entitlement programs—and shown only limited appetite for catching fraud within these unsustainable behemoths."

As we've Growled so many times before, government doesn't need to raise taxes, but rather it needs to learn how to control spending. We don't need to "spread the wealth" -- to use the words the President made famous in his 2008 conversation with "Joe the Plumber" -- in order to thicken that safety net. Thank you Secretary Geithner for making the case for anti-tax absolutism.

April 19, 2012

What the Arlington County Board Can’t Do!

Earlier this month, we Growled of how Wayne Kubicki and the Arlington County Civic Federation’s Reveneues & Expenditures Committee provided the leadership for a Fiscal Year 2013 budget recommendation for the County and Schools balanced the budget with NO real estate tax rate increase (requires Adobe). Heck, they even increased the County transfer to the Schools by $2.2 million. (Full disclosure: this copyist was a member of the R&E committee)

Now the Board is down to its final days before they are scheduled to adopt the FY 2013 budget on Saturday, April 21. The Board held its final “mark-up” work session on Tuesday. Here’s how Jason Spencer of the Clarendon-Courthouse-Rosslyn online Patch news outlet put the meeting in perspective:

“The final days of Arlington County budget negotiations will largely deal with a major last-minute funding request from the public school system and fine-tune the amount of money put toward affordable housing and capital maintenance.

“Tuesday, county and school officials grappled with a new law — the finer points of which are still being debated in Richmond — that requires local government employees, including teachers, to pay 5 percent of their salary into the Virginia Retirement System.

“Arlington Public Schools requested about $1.9 million to cover salary increases that will allow its employees to pay for the mandate and still receive a 2-percent cost of living adjustment.

"County Board members grumbled over the predicament they’d been put in.”

On that Schools request, Board member Jay Fisette said, “I’ve been here 14 years, and I don't think I've ever gotten anything of this magnitude the day before making a decision,” according to the Patch. (emphasis added)

The entirety of Spencer’s report is well-worth reading, including the following exchange between Board members on affordable housing:

“On the table is about $800,000, much of which Zimmerman and Tejada would like to see further bolster AHIF. Chairwoman Mary Hynes was hesitant Tuesday to move that money out of a reserve fund until further studies have been completed.

“I don't believe we need any more study to know that we need more funding for (affordable) housing,” Zimmerman said.

“Zimmerman argued that the county should commit to substantially growing the amount of ongoing dollars the county puts in AHIF over the long term. Fisette said he didn’t want to commit board members to spending tax money when they don’t know what circumstances the county will face in the future.”

Oh, the bad news? As Spencer reports, “At close of business Tuesday, the proposed $1 billion general fund budget included a 1.3-cent property tax increase, which would cost the owner of a $520,000 home about $160 more per year.” Maybe the Board should turnover governance to the Civic Federation?

For information about the Arlington County Manager's FY 2013 budget proposal, visit the Department of Management & Finance's website.

April 18, 2012

With Tax Freedom Day Past, Taxmageddon Looms

According to the Tax Foundation (Fiscal Fact No. 297, April 16, 2012), “the roughly $500 billion tax increase scheduled to occur January 1, 2013—could push Tax Freedom Day to the end of April or beyond.” We Growled about Tax Freedom Day yesterday.

Now comes Taxmageddon, which the Tax Foundation described this way:

“Taxmageddon, as Curtis Dubay (author of Heritage Issue Brief 3558, April 4, 2012) and others (Ezra Klein of the Washington Post, March 30, 2012) have described it, is the result of a litany of expiring tax provisions, all occurring at the end of this year. The biggest expiring provisions are the Bush tax cuts, the payroll tax holiday, and the Alternative Minimum Tax (AMT) patch."

Fox News writes about Taxmageddon this way a report today:

“As many Americans were scrambling to get this year's taxes done, analysts were warning about a bigger tax day -- what some call a tax Armageddon, or "Taxmageddon," to characterize its potential effect on the U.S. economy.

“At the end of the year, some $500 billion in tax breaks expire all at once, hitting American households with an average tax increase of $3,800 -- if Congress doesn't act.

“The potential increases include $165 billion more from taxpayers as a result of expiration of the Bush-era tax cuts, which would push taxes from a bottom rate of 10 percent and a top rate of 35 percent to a bottom rate of 15 percent and a top rate of 39.6 percent.

"Taxmageddon is a $500 billion, one-year tax hike that hits the economy on Jan. 1, 2013," Curtis Dubay of the Heritage Foundation said.”

The following table is from the Heritage Foundation’s Issue Brief 3558, and lays out the details of the $494 billion in tax increases that is scheduled to slam Americans on January 1, 2013.


Additional resources based on a Google search of “Taxmageddon:” Washington Post, February 18, 2012; David Leonhardt of the New York Times, April 13, 2012 reports Taxmageddon this way, "All in all, the end of 2012 will be unlike any other time in memory for the federal government." At Townhall.com, Larry Kudlow writes:

"In my latest interview with former Governor Mitt Romney, he emphatically defends his own business success against Obama’s class warfare/Buffett Rule/Romney Rule attacks.

"Don’t look for Mitt to back off from his free enterprise vision.

"He also told me he will go after HUD and DOE for budget cuts and consolidation, along with a slew of other agency cuts.  He will also roll back tax deductions for upper-earners while he lowers marginal rates by 20 percent across-the-board.  He does not want more stimulus from the Fed.  Thinks blaming speculators for high energy prices is completely wrong."

Finally, Keith Hansen opines at Brainerd Dispatch that "Taxmageddon lies ahead" for the nation "if we maintain the track we’re on there will be a collapse. Our debt is out of control. Our spending is more than the Internal Revenue takes in and 50 percent of the people in the U.S. do not pay taxes."

April 17, 2012

Today is Tax Freedom Day

In Special Report 198, the Tax Foundation announces that "Tax Freedom Day® 2012 arrives on April 17 this year, four days later than last year due to higher federal income and corporate tax collections. That means Americans will work 107 days into the year, from January 1 to April 17, to earn enough money to pay this year’s combined 29.2% federal, state, and local tax bill."

The report, prepared by William McBride, goes on to say:

"Tax Freedom Day is a vivid, calendar-based illustration of government’s cost, and it gives Americans an easy way to gauge the overall tax take. Conceived by Florida businessman Dallas Hostetler in 1948, he deeded the concept to the Tax Foundation upon his retirement in 1971. In 1990 sufficient data became available to calculate a separate Tax Freedom Day for each state."

Want a scary thought? A really scary one? McBride writes, "If the federal government raised taxes enough to close the budget deficit—an additional $1.014 trillion—Tax Freedom Day would come on May 14 instead of April 17. That’s an additional 27 days of government spending paid for by borrowing. This year’s federal budget deficit remains high, though it has declined slightly over the past two years."

Kudos to the Tax Foundation for this exceptionally helpful report that is helpful in understanding the extent of America's tax burden. Take a few minutes to browse the entire report, including its historical graph of tax freedom days, and the PowerPoint presentation.

April 16, 2012

Arlington County Board Raises Salaries of Top Staffers

Scott McCaffrey of the Arlington Sun Gazette reported today that "County Board members have agreed to pay raises for the three government employees who work directly for them." He went on to report:

"Government officials on April 13 confirmed that recently revised employment agreements give 2.5-percent raises to County Manager Barbara Donnellan, County Attorney Stephen MacIsaac and clerk to the County Board Hope Halleck.

"As a result, the new salaries – some retroactive to earlier dates – are $240,875 for Donnellan, $203,353 for MacIsaac and $93,541 for Halleck.

"(Halleck’s new salary also includes an additional two-percent increase for recently completing a professional-certification process.)"

To put those salaries in perspective, McCaffrey wrote:

"When veteran county staffer Donnellan was hired as county manager two years ago in the wake of the brief and cloudy tenure of an outsider, Michael Brown, she garnered a salary $235,000 a year. By comparison, Michael Long, who recently was hired as county executive in neighboring Fairfax County, will be brought in at a salary of $257,252 – although Fairfax is five times larger, in population, than Arlington.

"MacIsaac’s salary also will be slightly below his counterpart in the behemoth that is Fairfax County. The Fairfax Board of Supervisors in January increased County Attorney David Bobzien’s base salary to $210,114."

The County Board is ultimately accountable for those top salaries, but the difference in salaries between Arlington and it's Northern Virginia neighbor to the west is never the less troubling.

April 15, 2012

$15 Trillion to Fight Poverty, and Failing

Michael Tanner, director of health and welfare studies at the Cato Institute, has written a new "policy analysis" about the American welfare state and how the nation spends $1 trillion annually to fight poverty. Here is the executive summary (for the entire Policy Analysis No. 694, April 11, 2012 -- requires Adobe):

"On January 8, 1964, President Lyndon B. Johnson delivered a State of the Union address to Congress in which he declared an "unconditional war on poverty in America." At the time, the poverty rate in America was around 19 percent and falling rapidly. This year, it is reported that the poverty rate is expected to be roughly 15.1 percent and climbing. Between then and now, the federal government spent roughly $12 trillion fighting poverty, and state and local governments added another $3 trillion. Yet the poverty rate never fell below 10.5 percent and is now at the highest level in nearly a decade. Clearly, we have been doing something wrong.

"When most Americans think of welfare, they think of the cash benefit program known as Temporary Assistance to Needy Families (TANF), formerly known as Aid to Families with Dependent Children (AFDC). But in reality TANF is only a tiny portion of a vast array of federal government social welfare programs designed to fight poverty. In fact, if one considers those programs that are means-tested (and therefore obviously targeted to low-income Americans) and programs whose legislative language specifically classifies them as anti-poverty programs, there are currently 126 separate federal government programs designed to fight poverty."

HT Townhall.com.

April 14, 2012

If Politicians Set the Standard for Honesty

At the Independent Institute’s blog, The Beacon, on Friday, Robert Higgs set about wondering what life would be like “if politicians’ honesty set the standard for others.” Several of the examples included:

  • If engineers were no more honest than the typical politician, all of the bridges would fall down.
  • If accountants were no more honest than the typical politician, every firm would go bankrupt.
  • If carpenters were no more honest than the typical politician, every house would collapse.
  • If electricians were no more honest than the typical politician, we would all be electrocuted.

The bottom line for Mr. Higgs?

“So, the questions naturally arise: Why does anyone place any confidence in anything a politician says? Why does anyone expect anything but deception and predation from these dishonest reprobates? Why does anyone seek social improvement or economic salvation from the programs these ne’er-do-wells devise and implement? Why, indeed, do people continue to tolerate politics at all? (This last question presupposes, of course, that those who wish to use the political process to commit a de facto crime—that is, an act that, if committed privately, would be seen as plainly criminal—will be entirely in favor of politics because using the government as their agent-perpetrator offers a way to legalize their crimes. My question pertains to the noncriminal element of the population.)” (emphasis added)

Dallas Weaver then adds his comment: “We tolerate it because they are masters at diversion and we can’t see what they are doing. We see this in spades with the present diversion on the wealthy and the Buffet rule game that would have zip impact on the budget deficit.”

Thank you, Bob Higgs!

April 13, 2012

County Board Considers “Critical Needs” and Employee Compensation

The Arlington County Board held two “wrap-up sessions” this week in getting set for its April 21 meeting when it is scheduled to adopt a budget for Fiscal Year 2013. In today’s meeting, staff received “final follow-up” to previously raised Board questions. The schedule of budget work sessions contains links to a great deal of budget information that supplements information in the Manager’s proposed budget.

At the Clarendon-Courthouse-Rosslyn Patch online news website on Wednesday, Lauren Sausser reported that Board and staff discussed a list of ‘critical’ budget needs. For example:

“The critical needs list includes:

  • Converting old paper files in the human resources department into electronic files, $23,700.
  • Funding a position at the county employment center, $76,154.
  • Restoring library branch hours that were cut during the recession, $442,996
  • Police recruitment, $380,000.
  • Improving cyber security, $244,400.
  • Setting aside a general fund emergency "contingent," $500,000.
"Other recommendations made by county staff, but not included on the critical needs list, include:
  • Compensating employees for the Christmas and New Year's holidays, $250,000.
  • Hiring a consultant for a housing survey, $400,000.
  • Funding a "step" increase, which would bump up the salaries for some county employees, $747,668.

This afternoon, Patch reporter Jason Spencer just reported on a meeting the Board held earlier today where “the focus was on employee compensation.” One item discussed involved whether to spend $114,000 for about 40 so-called “live-where-you work” grants. Spencer reported it this way:

“The county, too, could once again fund a live-where-you-work program. Putting $114,000 into that program would allow the county to offer one-time grants to its employees who decide to buy a house in Arlington.

“That funding level should be sufficient for about 40 employees, said Jeanne Wardlaw, the county's Compensation Division chief. Grants are capped at 1 percent of the average home price in Arlington, she said.

“About 25 percent of Arlington employees live in the county. Board member Chris Zimmerman pointed out that a much higher percentage of local government employees — law enforcement and non-law enforcement — live where they work in the city of Alexandria and Fairfax County.

"It's a relatively small amount of money, but it's a permanent commitment," Zimmerman said. "I wasn't crazy about the fact that it was defunded before."

“The program has been funded in the past at about the level that was talked about Friday. It was cut in 2009, as the Great Recession forced the county to cut back on everything from library hours to employee compensation.”

The Board is scheduled to hold it’s “mark-up” session on Tuesday, April 17, when “final budget decisions” are made during the 3:00 -- 5:00 P.M. meeting. Attend the meeting if you can since it will be much more animated than will the Board’s budget adoption meeting on April 21, 2012.

April 12, 2012

Tax Facts for Journalists (and Taxpayers)

The Tax Foundation compiled a great sect of tax facts, which they published yesterday, The tax facts, pulled together by economist Will McBride, are based on IRS data for 2010 and the IRS National Taxpayers Advocate's Report to Congress for 2011. Tax facts such as (emphases in the original):

  • The IRS paid out $105 billion in refundable credits to filers who paid no income tax.
  • The IRS estimates that it takes more than 7 billion hours to comply with the tax code each ear.
  • The tax code is now 3.8 million words long.
  • Over the last ten years there have been about 4,428 changes to the tax code, or more than one a day, including about 579 changes in 2010 alone.

The chart below is the same Tax Foundation news release.


We thank Mr. McBride for compiling the tax facts. Many kudos!

April 11, 2012

Your Tax Dollars at Work at GSA's "Lavish Conferfence"

Taxpayers for Common Sense (TCS) has a nice and short summary of the "lavish conference spending" by the General Services Administration (GSA). For the gory details, TCS includes links to a Washington Post story, the GSA OIG report, and both CBS and NBC news reports. Here is TCS's summary:

"The media has been awash with reports on the more than $800,000 Las Vegas, NV conference the Western Regions of the General Services Agency (GSA) threw for themselves in 2010. Justifiably so.

"While the rest of the country was mired in a recession and Americans were struggling to make ends meet, GSA leadership from the Western Regions cooked up this outrageous internal meeting. To prepare for the conference, which a senior GSA official specifically directed to be “over the top,” staff made eight separate planning visits which cost taxpayers more than $130,000. They had a mind reader, a magician, and even an employee dressed up in a rented clown costume. A team-building exercise – building 24 bikes – cost $75,000. But it wasn’t just the excesses; GSA staff shared competitor bid information to ensure that the “right” hotel got the contract, and negotiations to get the government rate at the hotel guaranteed $41,000 in additional catering charges. You can’t make this stuff up.

"The Inspector General’s report mentions that some employees tried to rein in costs and were rebuffed. And at least one GSA employee complained to the Deputy Administrator of the GSA, who forwarded the complaint on to the IG’s office. The IG thoroughly investigated, and some heads ended up rolling at the agency. So in one sense the process worked, and as budget watchdogs we count on the IG offices, but it’s hard to fathom what these people were thinking as they prepared the conference. Perhaps that mind reader can tell us."

Lavish spending for conferences. More highly compensated, on average, than private sector workers. Heh, no wonder a recent Rasmussen Reports (TM) poll found:

"A majority of adults nationwide continues to believe that those who work for the government have it easier than those in the private sector and get paid more for it.

"Sixty-six percent (66%) of American Adults believe private sector workers work harder than government workers, according to a new Rasmussen Reports national telephone survey. Just eight percent (8%) say government employees are the harder workers, but another 25% are undecided."

More government. Just what is needed, right? Not! The OIG report even went so far as to say:

"The evidence the OIG developed, however, showed the goal was not to minimize costs, but to be 'over the top.'" (emphasis added)

UPDATE (4/14/12): At Washington Free Beacon, C.J. Ciaramella reports the administration knew about the scandal and that the "official responsible received only 'slap on the wrist,' and added:

"The General Services Administration official responsible for the agency’s lavish 2010 conference at a Las Vegas resort received only “a slap on the wrist” after agency administrators became aware of the wasteful spending, according to an internal GSA email released by the House Committee on Oversight and Government Reform Friday.

"The email, dated July 8, 2011, is from GSA Deputy Administrator Susan Brita to agency officials. In the email, Brita raised concerns that the agency’s lax discipline against Jeff Neely—who managed the now-infamous Vegas conference that featured mind readers and clowns—would look bad when facts of the conference were released to the public.

"Neely only received a disciplinary letter after GSA administrators first became aware of an impending inspector general report on the conference that cost taxpayers more than $800,000."

UPDATE (4/15/12): The editorial in tomorrow's Washington Examiner points out the "GSA 'jackasses' (are) not alone in fleecing  taxpayers."

UPDATE (4/15/12): Thanks to a friend who just e-mailed me this link to a Politico story that begins, "The General Services Administration official tasked with organizing a now-infamous $822,000 Las Vegas conference plans to invoke his Fifth Amendment rights ahead of a scheduled Monday grilling on the Hill." He snarkily commented, "I thought this option was reserved only for Mafia bosses and corrupt union thugs......"

UDATE (4/17/12): Today, the Washington Free Beacon reports, "Democratic Senate Majority Leader Harry Reid encouraged the federal government to allow taxpayer-funded trips to “resort towns” like Las Vegas," and cites a Roll Call story.

April 10, 2012

Politicians Promise Heaven, Deliver Hell

Thomas Sowell's op-ed in today's Investor's Business Daily is a gem, beginning with: "How long do politicians have to keep on promising heaven and delivering hell before people catch on, and stop getting swept away by rhetoric?"

Here are two more of the many gems in the column:

  • With all the talk about people paying their "fair share" of income taxes, why do nearly half the people in this country pay no income taxes at all? Is that their "fair share"? Or is creating more recipients of government handouts, at no cost to themselves, simply a strategy to gain more votes?
  • Some people are puzzled by the fact that so much that is said and done by politicians seems remote from reality. But reality is not what gets politicians elected. Appearances, rhetoric and emotions are what get them elected. Reality is what the voters and taxpayers are left to deal with, as a result of electing them.

Take a few minutes to read the entire column.

April 09, 2012

Even Budget Deficit News Has Good News

At his blog on Friday, the Congressional Budget Office (CBO) Director noted that the “federal budget deficit totals $780 billion in the first half of 2012.” Here’s how the CBO director summarized the CBO’s findings:

“The federal government incurred a budget deficit of almost $780 billion in the first half of fiscal year 2012, CBO estimates in its latest—Monthly Budget Review—$53 billion less than the shortfall during the same period last year. A few weeks ago, CBO issued new budget projections for the coming decade; at that time, CBO estimated that the federal deficit will total $1.2 trillion in fiscal year 2012 if no further legislation is enacted that would significantly affect spending or revenues this year.”

The CBO director also discussed the following two points:

  • Higher corporate tax receipts explain much of the 4.5% increase in revenues.
  • Outlays were slightly lower than spending at the same point last year.

Good news? Well ok, but the deficit was $53 billion less than last year at this time.

HT Jeff Dircksen at the National Taxpayers Union blog, Government Bytes.

April 08, 2012

Beware Politicians Claiming to be ‘Fiscally Responsible'

In a highly informative essay in American Enterprise Institute’s magazine, The American, last month, Steve Conover raises the question:

“Everybody is for ‘fiscal responsibility’; nobody is against it. Shouldn’t that be a red flag? Isn’t that a hint that something might be amiss in this so-called debate?”

Conover defines the problem this way:

“'Fiscal responsibility' is a catch-phrase that seemingly no politician can do without. The White House used “fiscal responsibility” to name a summit meeting, a bipartisan national commission, and one of their webpages. House Democrats named “fiscal responsibility” as a top priority; so did Senate Republicans. An entire Senate subcommittee was named after it. “Fiscal responsibility” was reportedly what the Tea Party counterculture was all about. Rick Santorum is for it; Romney is too.

“In short, everybody is for it, nobody is against it. Every politician who has an interest in getting elected or reelected must stake a claim to the virtuous mantle of “fiscal responsibility.” But despite the near-universal popularity of the catch-phrase, there lingers a nagging question: What, exactly, does “fiscal responsibility” mean?

“Opinions are diverse. To some, it means paying down the federal debt. To others, it means balancing the federal budget. Wrong, says another group, it means keeping the debt at a sustainable level in relation to the size of the economy. Wrong, wrong, wrong, says an emerging school of thought: it’s not about deficits and debt, it’s about outcomes, it means doing what it takes to sustain the world leadership role of the U.S. dollar and economy.”

“Few politicians have taken the time to define the term,” according to Conover, “so the best we can do is to draw inferences about what they probably mean.” But, he notes, “Anybody with private sector business experience understands the problem: If we can’t measure it, we can’t manage it.” He then goes on to discuss several possible meanings:

  1. Federal debt is decreasing
  2. Federal budget is balanced
  3. Debt ratio is on target and sustainable
  4. U.S. dollar is stead and the economy is strong

He concludes with this:

“Everybody is for “fiscal responsibility,” nobody is against it. Shouldn’t that be a red flag? Isn’t that a hint that something might be amiss in the so-called debate?

“If we don’t define “fiscal responsibility,” we can’t measure it; if we can’t measure it, we can’t manage it. It’s easy for politicians to say, and it fits conveniently on bumper stickers, placards, and webpages. But when it can have many conflicting meanings, it’s nothing more than political prestidigitation or rhetorical ornamentation."

So the next time you see or hear a politician touting their 'fiscal responsibility,' you’ll ask them to define exactly what they mean by the phrase. The essay is well-worth reading in its entirety.”

April 07, 2012

More Particulars on County Budget

Two items in the Civic Federation’s budget recommendation to the Arlington County Board were reported yesterday by Scott McCaffrey in the online Arlington Sun Gazette. One involved the County Manager’s “plan to hire a highly-paid staffer to recruit more minority applicants for county jobs,” according to the Sun Gazette. We also Growled about the Civic Federation’s budget analysis on April 5 and April 6.

McCaffrey reported the Federation’s justification this way:

“Wayne Kubicki, who chairs the federation’s revenues and expenditures committee, said county documents show that more than 60 percent of applicants for county-government jobs are members of one minority group or another.

“Current minority-recruitment efforts . . . appear to be more than sufficient,” Kubicki deadpanned.

“Establishment of the new position won’t be official until the County Board adopts the budget on April 21, and the funds to support it won’t be available until the start of the fiscal year on July 1. Donnellan proposes spending $115,000 for salary, benefits and expenses associated with the position.”

The details that Mr. Kubicki is referencing are on “web pages” 184 and 192 of the Human Resources Department of the County Manager’s proposed budget. Compensation for the diversity outreach position would be $115,000.

The rub is the performance measures do not reflect a problem. On “web page” 192, the performance measure for “female applicants as a percentage of total applicants” has ranged between 46% and 49% from FY 2008 to FY 2011. Minority applicants for the same four years has ranged from 62% to 67%.

Where’s the problem? Some Arlington taxpayers would like to know!

The second item in the Federation's budget recommendation would establish an Office of Inspector General. According to the Sun Gazette:

“Civic Federation delegates had a suggestion for how to use that money better: They reiterated support for creation of an inspector-general position within the government ranks, to root out waste, fraud, corruption and abuse.

“Delegates said that $150,000 would help fund a two- or three-person office for the second half of the fiscal year.

“The Civic Federation pointed to neighboring Fairfax County, which funds an Office of Financial and Program Audit to do essentially the work of an inspector general.

“In fiscal 2011, that agency completed 22 studies and made 42 recommendations to the Fairfax County Board of Supervisors, all of which were accepted. Combined, the recommendations represented the possibility of saving about $8.7 million.”

If the Arlington County masterminds really consider Arlington to be a world-class community, why does it need a diversity outreach position? And, shouldn’t every world-class community need an Office of Inspector General?

April 06, 2012

Fix It or Close It!

That was the message about Arlington County’s Artisphere that the Arlington County Civic Federation sent to the County Board on Tuesday evening. In addition to discussing and voting unanimously on the County Manager’s proposed FY 2013 budget (discussed yesterday in Growls), Civic Federation delegates also considered a separate resolution.

Here’s how Scott McCaffrey began his reporting in the online Arlington Sun Gazette on Wednesday:

“Delegates to the Arlington County Civic Federation on April 3 delivered a blunt message to county officials: Either get the troubled Artisphere under financial control soon, or shut the facility down.

“Delegates voted 30-12, with five abstentions, on a motion calling on county officials to close the facility by the end of the year if progress is not made in stemming an ongoing tide of red ink.

“The Artisphere, located in the former Newseum space in Rosslyn, opened with great fanfare in late 2010, but quickly proved to be a money pit for county taxpayers.

“The facility has busted its budget severely,” said Wayne Kubicki, who chairs the Civic Federation’s revenues and expenditures committee, which recommended the resolution. “It has nowhere near made its budget; it hasn’t come close. Revenues have been appreciably lower, expenses have been appreciably higher.”

The discussion about the Artisphere resolution was quite a bit more contentious than the budget resolution, as evidenced by the the following reporting by Mr. McCaffrey:

“Whether they’ve ever stepped inside or not, county taxpayers are major partners in the endeavor. Net tax support for the Artisphere totaled $2.1 million in fiscal 2011, $2.7 million in fiscal 2012 and is expected to be $1.6 million in fiscal 2013.

“Almost, but not quite, resisting the temptation to say I-told-you-so was Larry Mayer, a former Civic Association president who opposed the facility from the start.

“I saw very early on there was a lot of – I’ll try to be kind – fluff in the economic projections, [but] I was told I didn’t know what I was talking about,” Mayer said.

“Mayer said that in a time of tight budgets, the Artisphere may be a luxury the county can’t afford.

"We put an awful lot of money into this, a lot more than anyone expected,” he said.

"Both Kubicki and Mayer said they hoped the Artisphere could be turned around, if only to recoup the millions that have been spent on capital improvements to the space.”

A more detailed discussion of the financial problems of the Artisphere can be found on pages 11 and 12 of the Civic Federation’s budget analysis (requires Adobe). Here’s the Artisphere resolution that was passed by Federation delegates 38-12-5:

"Whereas, the Revenues & Expenditures Committee of the Arlington County Civic Federation has reviewed the Revised Artisphere Business Plan and Report of the Artisphere Task Force, dated November 29, 2011; and

“Whereas, the operations of Artisphere for FY11 (actual) and FY12 (re-projected) required annual Net Tax Support of $2.1M and $2.7M, respectively, well in excess of the budgeted amounts for both years; and

"Whereas, the County Manager’s proposed budget for FY13 provides for annual Net Tax Support for Artisphere of $1.6M, well in excess of the annual Net Tax Support originally projected for Artisphere;

"Therefore, be it resolved that it is the opinion of the Federation that, if Artisphere’s actual operations for FY13 do not appear to be approximately on budget as of late 2012, that the County Board should direct the County Manager to proceed to close the facility and negotiate a lease termination with the owner of the facility.”

If you do not agree with the Federation's analysis of the budget or the County Board's spending on the Artisphere, become a Civic Federation delegate (contact information here).

April 05, 2012

Can the Arlington County Board Perform as Well?

On Tuesday evening, the Arlington County Civic Federation adopted a budget for the Fiscal Year 2013 county budget with no real estate tax increase. (Emphasis added) Here’s how the Arlington Sun Gazette’s Scott McCaffrey reported it, in part, yesterday:

“Delegates to the Arlington County Civic Federation have recommended an alternative to the county government’s proposed fiscal 2013 budget that would keep real estate tax rates where they were, provide more funding for public-safety agencies and education, maintain existing maximum class sizes in schools and take a big-picture look at the government’s myriad housing programs.

“The spending package was adopted on a 42-0 vote, with five abstentions, at the federation’s April 3 meeting, which came three weeks before County Board members are expected to adopt a $1 billion FY13 budget.

“The federation’s budget proposal would retain the tax rate on residential real estate at 95.8 cents per $100 assessed value.

“That’s in contrast to county officials, who are likely to adopt a higher tax rate. Earlier in the budget process, County Manager Barbara Donnellan asked County Board members to advertise a maximum rate of 96.3 cents, but board members upped the ante and advertised a rate of 97.8 cents.

“The board will set the final rate on April 21.”

Thanks to the leadership of Wayne Kubicki, chairman of the Federation’s Revenues and Expenditures Committee, the committee’s report achieved their no-tax-increase recommendation by, among other things, identifying additional recurring revenue of $4.7 million. However, they also recommended additional funding for housing programs and for the Arlington Public Schools, restoring four Sheriff positions that were cut in prior years, and adding funds to accelerate street paving.

The Civic Federation’s budget report can be found here (requires Adobe).

The foregoing is just an overview of the Civic Federation’s budget recommendation, we’ll talk more about it in the run-up to April 21 when the Board is scheduled to adopt the FY 2013 budget.

If the Board eventually adopts a real estate tax rate that is lower than what they earlier advertised, Arlington taxpayers will owe Mr. Kubicki a thank you for showing the five Board members that it can be done.

UPDATE (4/6/12): ARLnow covered the results in its 'morning notes' on Wednesday.

April 04, 2012

Arlington’s Congressional Representatives Earn Failing Grades

America’s leading taxpayers group, the National Taxpayers Union (NTu), is out with its 33rd annual Congressional scorecard, which shows that both Senators Jim Webb and Mark Warner and Representative Jim Moran were rated Big Spenders because all three received an F from the nonpartisan, nonprofit citizen group that works for lower taxes, smaller government, and economic freedom.

Arlington’s members of Congress received the following scores:

  • Sen. Jim Webb -- F (score of 15%)
  • Sen. Mark Warner -- F (score of 15%)
  • Rep. Jim Moran -- F (score 14%)

NTU describes it’s annual scorecard this way:

“Unlike those of other organizations, NTU’s annual Rating does not focus on a mere handful of equally weighted “key votes,” but on every roll call vote affecting fiscal policy – appropriation, authorization, and tax bills; budget target resolutions; amendments; and certain regulatory or procedural votes that could affect overburdened taxpayers. For this reason, NTU’s Rating has received praise from lawmakers on both sides of the aisle, including the late Sen. William Proxmire (D-WI), creator of the “Golden Fleece Award.” A Member of Congress’s Taxpayer Score reflects his or her commitment to reducing or controlling federal spending, taxes, debt, and regulation.”

NTU’s press release announcing the latest ratings provide a lot more information about the ratings. The 2011 Congressional Ratings (requires Adobe) includes the ratings of all 535 members of Congress, a key to the ratings, and a complete explanation of NTU’s methodology.

If you wish to express your concern about the fiscal voting records of Arlington’s members of Congress, here are their phone numbers and links for e-mailing them:

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

April 03, 2012

Thought for Today

"Man is not free unless government is limited."

~  Ronald Reagan

HT Brainyquote

April 02, 2012

Balancing a State Budget: Virginia vs. Maryland

The front-page story in yesterday’s Washington Examiner focused on the “different paths to balanced budgets” by Maryland and Virginia. Essentially, Maryland uses taxes to close any "budget gaps" while Virginia cuts spending. According to the story by Hayley Peterson and Steve Contorno:

“Virginia and Maryland are taking starkly different approaches to closing budget gaps this year, with the Old Dominion relying almost entirely on a string of spending cuts and Maryland lawmakers pushing for a multimillion-dollar package of new taxes.

“The states' varying routes to balanced books are nothing new. Despite their proximity, Maryland and Virginia have been worlds apart almost since their foundings.

“Virginia's traditionally conservative politics are rooted in its agrarian origins, a pay-as-you-go sensibility that dominated its state legislature even when Democrats ran it. In contrast, Maryland was built up from the urban, unionized docks of Baltimore that produced a long line of liberal big-city mayors whose affection for activist government followed them to the governor's mansion.

"Maryland and Virginia have always been the yin and yang of Washington, but what's happening is Maryland is getting more yin as the years go by," said Stephen Farnsworth, a political scientist at the University of Mary Washington in Virginia. "The gap between the two states is widening."

According to the two reporters. the difference between the two states are:

“If Virginia cut as deeply as it could and core services were at risk, "then I say it would be time to look at other revenue increases," McDonnell said. "As tough as our situation has been, we really haven't been to that point."

“Across the river, Maryland Gov. Martin O'Malley, a Democrat and former Baltimore mayor, pushed for an 18-cent tax increase on gas, a doubling of the state's water fees and a new sales tax on certain Internet purchases, in addition to the income tax hike.

“Tax increases, O'Malley said, are necessary to maintain Maryland's best-in-the-nation public schools and other expensive public services, including the country's 10th-highest per-patient Medicaid spending; Virginia ranks 24th. Maryland raised taxes, he noted, only after he was "able to forge the consensus necessary to do so."

After reading the Examiner story, Virginians considering a move to Maryland may rethink that move.

April 01, 2012

Kudos to County Board Member Mary Hynes

It’s not often we offer kudos to a member of the Arlington County Board. However, Mary Hynes deserves an extra dose of kudos for asking how Arlington County’s taxes impact small business compared to other local jurisdictions.

On March 12, 2012, staff responded with a table showing how multi-jurisdictional tax rates impact small businesses in Northern Virginia (available at the DM&F webpage of follow-up to County Board). The table shows the total tax payment for seven Northern Virginia jurisdictions for three small businesses -- dog grooming, family restaurant, and a small bookkeeping business. Staff also provided the following limitation concerning the table:

“The following page contains a table that illustrates the different tax rates that may impact small businesses.  Three examples are provided that identify the type of business, the assumed amount of gross receipts, and assumed amounts of business property and real estate assessment, and the CY 2011 tax rates. To compare the impact of tax rates, we must assume that the gross receipts and the real estate assessment values associated with the samples businesses are of equal value across jurisdictions.  However, the reality is that similar types of business may have extremely different gross receipts and real estate assessment values depending upon location.”

Here is a brief comment on each business:

  • Dog Grooming Business. Assumes gross annual receipts of $450,000; value of business property -- $100,000; and assed value of real estate -- $1,150,000. Total taxes on the business in Arlington County would be $19,030. In the other six jurisdictions, total taxes would range from $16,811 in Fairfax City to $21,065 in Falls Church.
  • Family Restaurant. Assumptions were $1,100,000 in gross annual receipts; value of business property -- $320,000; and assessed value of real estate -- $1,900,000. Total taxes on the business in Arlington County would be $38,777. In the other six jurisdictions, total taxes would range from $34,359 in Fairfax City to $41,708 in Falls Church.
  • Small Bookkeeping Business. Assumptions were $310,000 in gross annual receipts; value of business property -- $40,000; and assessed value of real estate -- $700,000. Total taxes on the business in Arlington County would be $10,697. In the other six jurisdictions, total taxes would range from $9,871 in Fairfax City to $12,438 in Falls Church.

Similar to the table comparing residential taxes that is now a standard part of each year’s proposed budget, we look forward to the inclusion of a table similar to table attached to the response to Ms. Hynes’s question about the tax burden of Arlington County’s small businesses in future year’s proposed budgets although other types of small businesses should be included, e.g., service stations, coffee shops, etc.

So kudos to Ms. Hynes and for the extra work done by staff of the Department of Management & Finance.