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January 31, 2017

Arlington County's Board of Equalization to See Changes

According to its website, "The Board of Equalization (of Real Estate Assessments) conducts hearings on property assessment disputes. Acting on the basis of relevant evidence submitted by both property owner and the Department of Real Estate Assessments, it is their role to make a fair, impartial decision on all property assessment disputes appealed, between taxpayers and the Assessor."

It's also worth noting, "The Board of Equalization is separate and independent from the Assessor’s Office."

The Board of Equalization (BOE) is the second of three levels for appealing your real estate assessment, according to the county's appeals process webpage. If you do not agree with the BOE, you can file suit in Circuit Court.

With that said, the Arlington Sun Gazette reported today that "Arlington County Board members on Jan. 28 made two changes to the structure of the Board of Equalization, which hears appeals of real estate tax assessments." Specifically, the weekly newspaper said:

"Board members voted to have the board composed of between five and seven members (currently, number is five) and allowing one member to be a non-property-owning resident (currently, all must own real estate in Arlington).

"In announcing the proposed change last month, County Board members said it would add fairness to the panel to allow one of its members to be a renter, rather than an owner."

The Sun Gazette also writes, "More changes could be coming to the Board of Equalization: Legislation currently wending its way through the General Assembly would give the Circuit Court, not the County Board, the power to appoint a majority of members, and would allow the panel to be expanded up to 11 members." Stay tuned.

January 30, 2017

Land Purchased for Fire Station No. 8 Expansion

In their Morning Notes today, ARLnow.com reports, "The Arlington County Board has approved the $800,000 purchase of a home on N. Culpeper Street for the construction of a new, expanded Fire Station No. 8. The property is the final acquisition necessary to build a temporary fire station for use while the new station is constructed."

The online news item links to a county press release, issued Saturday, that contains the details, which are:

"The County Board on Saturday approved the purchase of the final property needed to build a temporary fire station directly behind Fire Station No. 8, which is slated to be torn down and rebuilt at 4845 Lee Highway. The Board authorized paying $800,000 for 2215 North Culpepper Street. The County had already approved agreement of sales for two other adjacent properties needed for the project.

"The purchase paves the way to build a new Fire Station No. 8 at its current location, as recommended by the Fire Station No. 8 Task Force. Funding for the project was included in the Fiscal Year 2017-2026 Capital Improvement Plan (CIP).

"With the purchase of the 2215 N. Culpepper Street property, the apparatus bay will be directly adjacent to the temporary fire station, which will be housed at the 2217 N. Culpepper Street existing property. This will decrease response times and construction costs. The purchase also allows for more flexibility in the construction of the new station and will decrease constructability issues, construction times, schedule delays and safety risks. For more information on the purchase, visit the County website. Scroll down the Agenda for the January 28, 2017 County Board Regular Meeting to Item No. 28 to read the staff report."

A search of Arlington County property records shows the property (RPC #08-001-056) had a 2017 total value of $519,200 on January 1, divided between a land value of $432,500 and $86,700 for the improvements. The property is zoned R-6/C-1. The single-family detached home was built in 1920. The last sales was June 2, 2014 for $475,000 with the deed recorded on page #1354 of book #4774. The previous sale occurred on June 23, 2009 for $330,000 with a sales code of K (financial institution). Previously, HSBC Bank USA acquired the property on May 19, 2009 for $279,875 (sales code 1, foreclosure, auction, bankruptcy).

As noted in the press release, the County Manager recommended purchase of the property in an agreement of sale (Agenda Item #28 on the Board's January 28, 2017 meeting). The item was on the Board's so-called Consent Agenda, but worse, the Board report wasn't posted until Thursday, January 26, two days prior to the Board meeting. As we noted in yesterday's Growls, the new procedures for public comment, require at least one member of the Board to approve a citizen's request to move the item to the recessed meeting for a full hearing. According to the Manager's report to the Board, the reported "fiscal impact" is:

"The acquisition cost of the Property, $800,000.00, along with associated closing costs ($5,000 to $10,000) and future expenses for the house removal and site restoration on the Property will be allocated from a combination of sources. Funds are available from previously authorized non-parks land acquisition bond funds and previously allocated non-parks land acquisition PAYG funds, including the $2.5 million allocated by the County Board for this purpose during close out of Fiscal Year 2016 (313.43563.FS8R and 313.91105.LA). In addition, there will be future additional costs for building the temporary fire station, and relocating the existing fueling station that also will be funded from these same sources. Because the design of the temporary fire station and the permanent fuel facility have not been completed, final cost estimates are not yet available; any additional funding, if needed, will be requested as part of the future budget or CIP process."

If you have a question or comment about the County Board's decision to pay $800,000 for a property, which the county's real estate assessors valued at $519,200 earlier this month, take a few minutes to ask your question or make your opinion known to the Arlington County Board. Just click-on the link below:

  • Call the County Board office at (703) 228-3130.

And tell them ACTA sent you.

January 29, 2017

Arlington County Board Adopts New Rule for Public Comment

We missed the news item, but on January 6, the Arlington Sun Gazette reported on January 6 that the Arlington County Board was adding a "new rule to public comment."

Here are the details, according to the Sun Gazette:

"Board members on Jan. 3 made a small but not necessarily insignificant change to the rules that cover their public meetings. It’s one that probably only civic wonks will have much interest in, but could change the dynamics of the sometimes marathon meetings.

"No longer will members of the public be able to remove any item from the County Board’s “consent agenda” for a full airing. While they will still be able to seek full discussion of items that are subject to Virginia’s public-hearing rules, in other cases members of the public will need to convince at least one board member to pull the item for discussion.

"The vote was 5-0 to make the change."

The newspaper then speculates the reason for the change, writing:

"The rules revision seems to target a very small but vocal type of civic activist, who have made a practice of having consent-agenda items removed from Saturday-morning meetings and then discussed at the subsequent Tuesday-evening gatherings. Often, county officials grumble privately, pulling the items off the consent agenda is merely to give the activists an opportunity to sound off – and not always about the topic at hand."

Additional details are contained in the three items that can be accessed at the Arlington County Board's January 3 organizational meeting agenda for its 2017 meeting procedures.

For information about open government in Virginia, visit the Virginia Coalition for Open Government website. VCOG is "a nonprofit alliance formed to promote expanded access to government records, meetings and other proceedings at the state and local level."

If you have a question or comment about the County Board's new meeting procedures, take a minute to ask your question or make your opinion known to the Arlington County Board. Just click-on the link below:

  • Call the County Board office at (703) 228-3130.

And tell them ACTA sent you.

January 28, 2017

A Thought about Liberty

"But a Constitution of Government once changed from Freedom, can never be restored. Liberty, once lost, is lost forever."

~ John Adams, letter to Abigail Adams — 1775

Source: Founders' Quote Database, The Patriot Post.

January 27, 2017

Are Classes in the Arlington Public Schools Overcrowded?

In his School Board Notes column in this week's Arlington Sun Gazette, Scott McCaffrey says, "Arlington high-school students are about as likely this year as the past two years to be in an overcrowded classroom, according to new figures, but there has been a significant decline at the middle-school level."

According to McCaffrey:

"A total of 14.9 percent of high-school classes (core courses plus foreign-language) have more than the desired limit of 27 students, according to figures reported to School Board members on Jan. 19.

"That’s not too much more than the 14.7 percent in the 2015-16 school year and 14.5 percent in 2014-15, but is significantly higher than 8.7 percent in 2013-14 and 2 percent in 2012-13 – a time before the school system’s growth spurt had begun to percolate up to the secondary-school level.

"At the middle-school level (again focusing on core courses and foreign language) only 1.5 percent of classes have more than 27 students, down from 4.8 percent from a year ago and more in line with the three previous years: 2.6 percent in 2014-15, 1.7 percent in 2013-14 and 0.4 percent in 2012-13."

He adds, "School Board Vice Chairman Barbara Kanninen said that while the overall figures are not particularly worrisome, it is worrying when students find themselves in multiple large classes through the day."

Yesterday, we growled about APS's enrollment projections. At the School Board's January 19 meeting, staff combined those projections and class size information into the same PowerPoint presentation (agenda item E.4. on the School Board's January 19 agenda).

The complete 28-page class size report  is available at the Schools statistics webpage.

You can compare average class size for the 10 school districts in the Washington DC area by using the Washington Area Boards of Education (WABE) Guide, available at the Budget & Finance webpage.

The Arlington School Board can express concern about class size. However, when looking at average class sizes in the latest WABE report, the Arlington Public Schools (APS) compare very favorably. When using students per classroom teacher, only the Alexandria public schools have a lower average while APS has the lowest average at both the middle and high school levels. If the comparison uses students per "teacher-scale" positions (e.g., librarians, music, art, etc.), the APS averages are still very favorable: elementary (lowest); middle school (3rd lowest); and high school (4th lowest).

Arlington Public Schools classrooms are crowded only when the Schools' so-called "planning factors" are the comparison.

Given the implications for taxpayers, Growls readers may want to direct questions and comments about class size to the Arlington School Board. Just click-on the link below:

  • Call the School Board office at (703) 228-6015

And tell them ACTA sent you.

January 26, 2017

Arlington Public School Enrollment Expected to Grow 20%

At their January 19 meeting, the Arlington School Board learned that school enrollment is projected to increase to 32,500 students, or 20%, by 2026. according to Scott McCaffrey in his School Board notes in this week's Arlington Sun Gazette. He writes:

"Now about 27,000, enrollment in Arlington’s public schools would grow to 32,500 by September 2026, according to projections presented to School Board members on Jan. 19.

"The figures should come as no shock; school officials have said for several years they expect the student population to reach 30,000 (a total exceeding even that of the Baby Boom era) by 2021, then keep rising.

"Projections a decade out are tricky things: At the briefing, enrollment totals from 32,000 to almost 39,000 were deemed possible by 2026, depending on how the growth was guesstimated."

Here's the bottom line for Arlington County taxpayers. McCaffrey explains:

"The growth spurt has put a burden on the school system’s $600 million annual budget, as each new student adds about $19,000 in costs each year. It also has challenged the school system to find space for all the new bodies."

By the way, if you do the math, at $19,000 per student, the extra 5,500 students will cost Arlington County taxpayers more than $100 million annually, which translates to about a 16-cent increase in the real estate tax rate, assuming no growth in the real estate tax base.

McCaffrey included the following chart in the online version of the story, which shows APS enrollment growth for the period 2001 -- 2016.


The chart is "slide 25" in the PowerPoint presentation to the School Board. In the presentation, staff updated the School Board on enrollment projections and class size (agenda item E.4. on the School Board's January 19 agenda).

Given the implications for taxpayers, Growls readers may want to direct questions and comments to the Arlington School Board. Just click-on the link below:

  • Call the School Board office at (703) 228-6015

And tell them ACTA sent you.

January 25, 2017

Arlington County's Special Interests' Plans Never Die

Scott McCaffrey reports in a story today at the online Arlington Sun Gazette that Arlington County's plan for a boathouse isn't dead. He went on to explain:

"Reports of its demise have been greatly exaggerated, County Board Chairman Jay Fisette said of efforts – now two decades old and counting – to build a boathouse for rowing enthusiasts on the Arlington side of the Potomac River.

“It is not a dead issue at all. It has made progress, slow but steady. We’ve worked on it hard,” Fisette said of the effort during the Jan. 19 “Meet the Chairman” event sponsored by the Leadership Center for Excellence.

"Interest in providing a boathouse has been stymied by funding issues and the fact that the land along the Potomac is under the control of the National Park Service. That agency’s interest in a proposal has ebbed and flowed through the years, and without enthusiastic backing, Arlington’s efforts would be for naught.

"“It’s not our land, it’s National Park Service land,” Fisette said.

"County Board members in 2014 agreed to spend $2.4 million for a parcel just south of Key Bridge in Rosslyn, saying at the time that a boathouse seemed a suitable option for the property but cautioning that stumbling blocks – including traffic and vehicular access – made it less than a slam-dunk sure thing.

"There also remains the need to win over community sentiment, and because the project has been dormant in the public’s mind, any kick-start of civic engagement may need to begin from scratch.

"But there already are thoughts and concerns.

"“We want the boathouse [area] to be pristine,” said Nora Palmatier, a veteran civic activist and member of the Arlington Urban Forestry Commission, voicing concern about visual clutter that would disrupt waterfront vistas and denude foliage."

The entire article is worth reading since McCaffrey provides a history of plans for the boathouse, and that "Arlington’s school system has a long connection to rowing on the Potomac."

Although the boathouse has a history that goes back two decades, we haven't growled about it much recently.

We did growl almost three years ago (May 17, 2014), though, when the Arlington County Board voted to pay $2.4 million to a developer for a parcel of land (1101 Lee Highway). The developer acquired the parcel in 1998 for $445,000. Its 2014 assessment was $619,600.

And you thought the County Board was a responsible caretaker of your tax dollars? Wrong!

If you have questions about the planned boathouse, or wish to comment on it, take a minute to make your opinion known to the Arlington County Board. Just click-on the link below:

  • Call the County Board office at (703) 228-3130.

And tell them ACTA sent you.

January 24, 2017

Federal Governments Flunks Fiscal Year 2016 Audit

Earlier this month, Investor's Business Daily (IBD) began their editorial about the "GAO’s report on the U.S. government’s consolidated financial statements for fiscal years 2016 and 2015" by asking "(w)hat do you call it when a major organization's financial statements are so deceptive and badly kept that even its auditor refuses to render an opinion?" Their answer was the federal government.

The IBD editorial began this wayl:

"That's right, the U.S. Government Accountability Office (GAO), the federal government's accountant, refused to hand down an opinion of the federal government's financial statements for 2016 "due to deficiencies that have plagued prior financial statements — persistent financial management problems at the Department of Defense (DOD), the government's inability to account for and reconcile certain transactions, an ineffective process for preparing the consolidated financial statements, and significant uncertainties."

"No question that, just like Enron, if this happened in the private sector, the executives in charge would either be fired or tried for fraud, and the shareholders would suffer major losses. But U.S. taxpayers pay little attention to the problem since they don't know how bad it really is. And the sad thing is, no one does.

"The Department of Defense, the Department of Housing and Urban Development, and the Department of Agriculture were all singled out by the GAO for criticism over their financial management.

"But to be fair, controls seem to be quite lax everywhere in government.

"In particular, the report cites the estimated $144 billion spent by the federal government in 2016 on "improper payments," a gain of 5% from 2015. It goes on to criticize "weaknesses in internal control" over such things as information security — repeated incidents of Chinese and Russian cyberhacking and Hillary Clinton's home-brew email server come to mind — and problems with "tax collection activities."

"But by far the most worrisome weakness the GAO cited is the unbridled growth in entitlements, especially Medicare costs, and the overly optimistic assumptions made in the nation's budgets about them. This failure places our ability to assess the health of our nation's future finances in doubt."

IBD concludes the editorial by pointing out:

"At some point, those who now eagerly snap up our debts will say, "No, thanks." Then we'll have serious, difficult fiscal choices to make — and very likely an ugly kind of intergenerational warfare over taxes, benefits and spending will break out. (emphasis added)

"All because we can't be honest about the problems we face, as the GAO report indicates. It's a big vote of no-confidence in the government's fiscal management when the only solid conclusion the GAO can give us is that "absent policy changes, the federal government's fiscal path is unsustainable." (emphasis added)

You can review a summary of the GAO report here, as well as link to the full 284-page report. GAO listed their four major audit findings as:

"Certain material weaknesses in internal control over financial reporting and other limitations on the scope of its work resulted in conditions that prevented GAO from expressing an opinion on the accrual-based consolidated financial statements as of and for the fiscal years ended September 30, 2016, and 2015. About 34 percent of the federal government’s reported total assets as of September 30, 2016, and approximately 18 percent of the federal government’s reported net cost for fiscal year 2016 relate to significant federal entities that, as of the date of GAO’s audit report, were unable to issue audited financial statements, were unable to receive audit opinions on the complete set of financial statements, or received a disclaimer of opinion on their fiscal year 2016 financial statements.

"Significant uncertainties, primarily related to the achievement of projected reductions in Medicare cost growth, prevented GAO from expressing an opinion on the sustainability financial statements, which consist of the 2016 and 2015 Statements of Long-Term Fiscal Projections; the 2016, 2015, 2014, 2013, and 2012 Statements of Social Insurance; and the 2016 and 2015 Statements of Changes in Social Insurance Amounts. About $32.5 trillion, or 70.0 percent, of the reported total present value of future expenditures in excess of future revenue presented in the 2016 Statement of Social Insurance relates to Medicare programs reported in the Department of Health and Human Services’ 2016 Statement of Social Insurance, which received a disclaimer of opinion. A material weakness in internal control also prevented GAO from expressing an opinion on the 2016 and 2015 Statements of Long-Term Fiscal Projections.

"Material weaknesses resulted in ineffective internal control over financial reporting for fiscal year 2016.

"Material weaknesses and other scope limitations discussed in the audit report limited GAO’s tests of compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements for fiscal year 2016."

At the National Taxpayers Union blog yesterday, Demian Brady and Spencer Woody commented on the GAO report, writing:

"GAO’s audit revealed that parts of the federal government are in desperate need of better financial management. While most departments and agencies received a clean audit, the main culprits cited by the Comptroller General were the Department of Defense (DoD) and the Department of Housing and Urban Development which “have continuing impediments to receiving a clean opinion on their financial statements,” and the Department of Agriculture which obtained a clean audit for only one of its financial statements.

"Without audited financial statements and more information, the GAO cannot provide an opinion on the state of the government’s financial status. A disclaimer of opinion means that “the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, and concludes that the possible effects on the financial statements of undetected misstatements, if any, could be both material and pervasive.”

Brady and Woody concluded:

"The GAO echoes the warning from other fiscal watchdogs that the federal government’s current fiscal path is unsustainable, but the lack of financial transparency and shoddy accounting practices hinders effective oversight of how taxpayer dollars are being used. If this next administration is serious about shaping a better functioning government, the necessary reforms include better transparency and accountability, especially on the financial level. (A smaller federal government would also ease the burden on both taxpayers and Congress’s oversight committees.) Taxpayers should expect the same standards of accountability from the government that the Internal Revenue Service and regulatory agencies like the Securities and Exchange Commission demand of citizens and companies."

Other than the reporting of the Washington Free Beacon and Government Executive Magazine, your  humble scribe was unable to find very many members of the mainstream media that reported on GAO's audit of the federal government's financial statements.

An interesting way to improve transparency and accountability of the federal government's financial management is discussed in a statement from the American Institute of Certified Public Accountants (AICPA) in which they support "presentation to Congress regarding Federal Government's audited financial statements." Here's their short statement:

"The American Institute of CPAs (AICPA) has expressed its support for a concurrent resolution “providing for a joint session of Congress to receive a presentation from the Comptroller General of the United States regarding the audited financial statement of the executive branch.”

"H. Con. Res. 140, the Fiscal State of the Nation, was introduced by U.S. Rep. Jim Renacci (R-Ohio) and 23 other lawmakers through their Bipartisan Working Group on July 5.

“We believe requiring the Comptroller General to make an annual presentation before a joint session of Congress will be very useful in helping these key policymakers focus in on some of the most important aspects of the financial statements, including financial and sustainability measures, and understand the findings of the audit,” AICPA President and CEO Barry C. Melancon, CPA, CGMA, stated in the Institute’s September 6 letter.  “The requirements outlined in this Concurrent Resolution also represent another critical step in moving our Federal government forward, particularly as it relates to financial accountability and transparency, and will allow for improved decision making around government spending and stewardship of our nation’s assets.”

"Renacci, a CPA and member of the Congressional CPA and Accountants Caucus, said, “We need to begin to get serious about our fiscal future and lawmakers must fully understand the financial statements of the United States in order to adequately address these issues.  That is why this bill is an important first step to educate lawmakers and Americans so we can work towards finding a solution – ensuring that we do not burden our children and grandchildren with our massive debt.  Our fiscal health is not a partisan issue and we need to start taking control.”

Although such a presentation to a full session of Congress might require an extra time demand on members of Congress, it could easily be coordinated with the president's annual state of the union message. Given that the president's annual state of the union speech is often more concerned with the many new programs being promised, it seems the state of the union's finances are far more important than much of what is in the state of the union speech. Thus, it seems American citizens need to know the fiscal state of the nation as much if not more so than other aspects of the current annual speech.

Take a few minutes to write your member of Congress. Ask your members of Congress to support H. Con. Res. 140, the Fiscal State of the Nation. Contact information is available at the Library of Congress' Congress.gov. Taxpayers living in Virginia's Arlington County can contact:

  • Senator Mark Warner (D) -- write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376

Ask for a written response. And tell them ACTA sent you.

January 23, 2017

Metro Gets Financial Breathing Room?

In the Metro section of today's Washington Post, Robert McCartney writes that "Metro gets extra money for operations," but Maryland and Northern Virginia "warn agency not to expect future subsidies to grow."

McCartney began his explanation this way:

"The District, Maryland and Northern Virginia have agreed to give Metro the extra money it has requested for its next budget, granting the transit agency a bit of financial breathing room as it works to improve safety and reliability.

"The key event came Wednesday, when Maryland Gov. Larry Hogan (R) presented a budget that includes a $42 million increase in the state’s subsidy for Metro operations for the fiscal year that begins July 1.

"Northern Virginia officials had said they viewed Metro’s request as reasonable, and the District’s support was never in doubt; Virginia was asked to increase its subsidy by nearly $40 million, the District by nearly $50 million.

"The three jurisdictions’ commitments mean that Metro can count on getting the extra money that General Manager Paul J. Wiedefeld sought in his $1.8 billion operating budget presented in October.

"Hogan authorized the increase without fanfare even though the Maryland transportation budget is tight, and he prefers to spend money on roads that serve his political base in rural and outer suburban communities.

"Analysts said Hogan may have acted partly to avoid a politically damaging battle with the Democratic-controlled General Assembly, where he risked being portrayed as an enemy of Metro.

"Democrats in the legislature said they plan to push Hogan to raise Maryland’s contribution even more, to allow Metro to avoid planned fare hikes and service cuts.

"But Maryland Transportation Secretary Pete Rahn cautioned the state wouldn’t go beyond what Metro has sought.

“Governor Hogan and Secretary Rahn have been very clear about how they feel about these types of requests,” Rahn spokeswoman Erin Henson said.

"Northern Virginia officials also said they would oppose increasing the subsidy beyond what Metro requested.

"In addition, Rahn and Virginia officials have warned they would not necessarily boost the subsidy as much as Metro wants in future years, when the transit agency projects its needs will continue to rise.

"But the increased subsidy this year relieves some pressure on agency at a critical time: Metro needs to complete its SafeTrack maintenance program and set up a federally mandated safety commission to provide oversight.

"Both the Maryland and Virginia general assemblies are expected to approve bills to create the safety body, and they are considering related legislation as well. The D.C. Council has already approved the commission. All must approve identical legislation."

Read McCartney's entire article for additional information such as bills filed by Maryland and Virginia legislators in response to the increased subsidy payments.

We growled extensively on Saturday about the subsidies that are provided to Metro, that are in addition to what Metro riders put into fareboxes. In the Growls, we pointed out the subsidies that Arlington County provides Metro have grown at 8.2% annually since FY 2001 began while overall Arlington County spending -- including spending for the most expensive schools in the region's Arlington public schools -- has grown at only a 4.9% annual rate.

Rather than increasing Metro subsidies, we growled that Metro should consider privatizing the Metro system, and referred readers to a blog post by Chris Edwards at Cato@Liberty, where he cited a McKinsey & Co. study of Hong Kong's MTR Corporation, which manages the Hong Kong and other subway systems. And apparently operates them very well.

If you agree, and think the Metro board of directors should evaluate contracting the Metro system to MTR Corporation, please communicate your opinion to the Arlington County Board. Just click-on the link below:

  • Call the County Board office at (703) 228-3130.

And tell them ACTA sent you.

January 22, 2017

Federal Spending on Defense and Welfare

At CNS News on Friday, Terry Jeffrey reports that "Barack Obama was the first president of the United States to spend more on “means-tested entitlements”—AKA welfare—than on national defense, according to data published by his own Office of Management and Budget.

He explains it this way:

"Historical tables that the OMB posted on the Obama White House website, include annual totals for both “national defense” spending and “means-tested entitlement” spending going back to fiscal 1962--which is three years before President Lyndon Johnson signed legislation creating the Medicaid program, a means-tested entitlement that together with the Children's Health Insurance Program enrolled 74,407,191 beneficiaries as of November 2016.

"In every year from fiscal 1962 through fiscal 2014, total national defense spending exceeded means-tested entitlement spending.

"In fiscal year 1962, for example, the federal government spent more than twelve times as much money on national defense ($52,345,000,000) as it did on means-test entitlements ($4,300,000,000).

"However, national defense spending peaked in 2011, when it hit $705,554,000,000. By contrast, means-tested entitlement spending has increased each year since 2012.

"Finally, in fiscal 2015, it exceeded national defense spending for the first time."

Below is a chart showing the trend lines for welfare and defense spending:


If you have nothing to do on a cold winter night, and have a full pot of strong coffee, take a couple of hours to plow through the 363 pages of the historical tables to the FY 2017 budget of the United States government. By the time the pot of coffee is empty, you'll have a better understanding of why the national debt is now nearly $20 trillion.

You may also be in a better mood to write your member of Congress, and be ready to tell them why they need to begin reducing the national debt.  Contact information is available at the Library of Congress' Congress.gov. Taxpayers living in Virginia's Arlington County can contact:

  • Senator Mark Warner (D) -- write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376

Ask for a written response. And tell them ACTA sent you.

January 21, 2017

Don't Subsidize Metro. Privatize it!

Over the last several years, Washington DC's Metrorail system has experienced a number of high profile problems, including financial ones. For just one profile of the system's financial problems, the Washington Examiner published an article on October 31, 2016, reported:

"The Washington Metrorail has proposed terminating 1,000 employees as a way to cut costs in fiscal year 2018, when the Washington Metropolitan Area Transit Authority faces a nearly $300 million budget gap.

"The D.C. Metro published a document on Sunday listing its options for continuing operations in the midst of a severe pinch in funding due to significant costs to repair parts of the system. In addition to cutting employees, staffers would lose some or all of their healthcare benefits.

"Rail service would also be more limited, increasing wait times for trains starting in July 2017, when the new fiscal year commences. During peak hours, trains would operate every two to four minutes at stations served by multiple lines. For single line stations, service would take place every eight minutes instead of every six minutes. Rush trains would be completely eliminated."

For another view of the 40 year-old transportation system in a "mid-life crisis," the New York Times reported April 3, 2016, "The capital’s once-glorious subway system, the nation’s second busiest, is short on cash and a terrible mess."

In addition to what Arlington citizens deposit into Metro fare boxes, Arlington County taxpayers contributed over $30.3 million in Fiscal Year 2016 (Table D-1 in the statistical section of Arlington County's FY 2016 Comprehensive Annual Financial Report -- the CAFR -- on the Accounting webpage). Even worse news is that while the overall county budget has increased 4.9% annually since 2001, the Metro subsidy has increased 8.2% annually over the same time period.

Which gets us to a post by Chris Edwards, editor of DownsizingGovernment.org, at the Cato Institute's Cato@Liberty blog on Wednesday. He writes:

"Some members of Congress are considering restructuring DC Metro’s management and oversight. Big reforms are needed given the disastrous service, safety, and financial performance of the system in recent years.

"Why not privatize Metro? Countries around the world have been privatizing their transportation infrastructure in order to improve management and efficiency. Privatizing Metro buses would be straightforward, but even privatizing the subway system would not be an unheard of reform.

"Hong Kong privatized its subway system in 2000. In a recent study on infrastructure, McKinsey reported:

"Hong Kong’s MTR Corporation has defied the odds and delivered significant financial and social benefits: excellent transit, new and vibrant neighborhoods, opportunities for real-estate developers and small businesses, and the conservation of open space. The whole system operates on a self-sustaining basis, without the need for direct taxpayer subsidies.

"MTR’s railway system covers 221 kilometers and is used by more than five million people each weekday. It not only performs well—trains run on schedule 99.9 percent of the time—but actually makes a profit: $1.5 billion in 2014. MTR fares are also relatively low compared with those of metro systems in other developed cities. The average fare for an MTR trip in 2014 was less than $1.00, well under base fares in Tokyo (about $1.50), New York ($2.75), and Stockholm (about $4.00).

"That sounds pretty darn good. The average fare on the DC Metro is about $3. The on-time record of Metro is unclear, but in technical terms I think “crappy” best describes it. Note that Hong Kong’s 99.9 percent on-time record means that “of the average 5.2 million passenger trips made on the MTR heavy rail and light rail networks on each normal weekday, 5.195 million passengers safely reach their destinations within 5 minutes of their scheduled arrival times.” In 2014, “the system ran for 120 consecutive days without a single delay over eight minutes.” Wow."

Edwards concludes, writing:

"The MTR is probably the best-run subway system in the world. The system is an “immaculately clean, well-signposted, cheap, regular, convenient system.” And there’s free Wi-Fi in most stations.

"The system is so admired that MTR has been contracted to run systems in other cities . . . .

"Can we get MTR Corporation to expand into Washington? Metro Board Chairman Jack Evans wants a federal takeover of Metro, but how about a private takeover?"

Earlier today, Jim Bacon, proprietor of the Bacon's Rebellion blog, wrote about Chris Edwards' Cato@Liberty post, and then provided this "bottom line:"

"It would be unrealistic to expect Hong Kong results in in the Washington Metro. For one reason, Hong Kong is far more densely populated and rail is a more attractive option compared to driving. For another, it’s not clear whether Washington Metro could extract the same economic benefit from putting real estate deals together that MTR could. Zoning controls and land use planning may work very differently in the U.S. than in Honk Kong.  But the idea certainly appears to be worth pursuing. If MTR could do no more than bring operational efficiencies to Metro, Virginians would benefit from better service and lower subsidies."

In case you're wondering how Arlington County's Metro subsidy compares to other estimates coming from the Arlington County Board, consider that almost two years ago, we growled about the additional revenue that would accrue if the county could magically increase the office vacancy rate by 10%.  The chair of the county's economic development commission told Arlington County Civic Federation delegates that "an increase of 10% in office occupancy would represent $34 million annually in local tax revenues."

If you think the Metro board of directors should evaluate contracting the Metro system to MTR Corporation, please communicate your opinion to the Arlington County Board. Just click-on the link below:

  • Call the County Board office at (703) 228-3130.

And tell them ACTA sent you.

Kudos to the Cato Institute's Chris Edwards for his timely post.

January 20, 2017

Climate Change & the Difference of Just One Minute

At the Climate Depot website, Marc Morano reports that at noon today -- the exact time that Donald Trump was inaugurated as America's 45th president -- all references to so-called climate change were deleted from the White House website. Specifically, he noted:

"'At 11:59 am eastern, the official White House website had a lengthy information page about the threat of climate change and the steps the federal government had taken to fight it. At noon, at the instant Donald Trump took office, the page was gone, as well as any mention of climate change or global warming.'"

Morano went on to explain (see original post for embedded links):

"A climate of change! Perhaps the most stark contrast between the Obama administration and the Trump administration is on “global warming”. The climate differences were visible today as the White House website was scrubbed of all references to “climate change” at exactly noon today just as President Donald Trump was sworn in.

"Climate Depot statement: “Climate skeptics are thrilled that one of the very first visible changes of the transition of power between President Obama and President Trump is the booting of “climate change” from the White House website. Trump is truly going to make science great again and reject the notion that humans are the control knob of the climate and UN treaties and EPA regulations can somehow regulate temperature and storminess. Welcome to the era of sound science!” (Note: Skeptical Film ‘Climate Hustle’ Now Available As ‘Streaming Video On Demand’ to Greet Gore’s Sequel)

"Meteorologist and Weather Channel Founder John Coleman had one word to describe the White House climate website changes. ‘Hooray!,” Coleman, a climate skeptic, tweeted. (Also see: Weather Channel Founder: Gore’s ‘An Inconvenient Sequel’ Will Be Another ‘Scientific Monstrosity’)

He includes a list of the webpages he links to.

Kudos to the small, but important, change about global warming made by Team Trump.

January 19, 2017

A Thought about Wealth

“Wealth is the product of man's capacity to think.”

~ Ayn Rand

Source: ThinkExist.com.

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In an article for Townhall.com almost two years ago, David Boaz, executive vice president at the Cato Institute, wrote:

"Like Ludwig von Mises and F. A. Hayek, (Ayn) Rand demonstrates the importance of immigration not just to America but to American libertarianism. Mises had fled his native Austria right before the Nazis confiscated his library, Rand fled the Communists who came to power in her native Russia. When a heckler asked her at a public speech, “Why should we care what a foreigner thinks?”, she replied with her usual fire, “I chose to be an American. What did you ever do, except for having been born?”

"George Gilder called (Rand's book) Atlas Shrugged “the most important novel of ideas since War and Peace.” Writing in the Washington Post, he explained her impact on the world of ideas and especially the world of capitalist ideas: “Rand flung her gigantic books into the teeth of an intelligentsia still intoxicated by state power, during an era when even Dwight Eisenhower maintained tax rates of 90 percent and confessed his inability to answer Nikita Khrushchev’s assertion that capitalism was immoral because it was based on greed.”

"Rand’s books first appeared when no one seemed to support freedom and capitalism, and when even capitalism’s greatest defenders seemed to emphasize its utility, not its morality. It was often said at the time that socialism is a good idea in theory, but human beings just aren’t good enough for socialism. It was Ayn Rand who said that socialism is not good enough for human beings.

"Her books garnered millions of readers because they presented a passionate philosophical case for individual rights and capitalism, and did so through the medium of vivid, can’t-put-it-down novels. The people who read Ayn Rand and got the point didn’t just become aware of costs and benefits, incentives and trade-offs. They became passionate advocates of liberty."

January 18, 2017

A Thought about Presidents and the Economy

"Presidential reputations rise or fall with gross domestic product. The state of the economy can determine if presidents are re-elected, and it shapes historical memory of their success or failure.

"In the news media, we often use the handover of power as the time for assessing the economic record of the departing president. (I’ve done it myself recently.) Some economists have predicted that the Trump administration could create the next recession or financial crisis. And scholars have studied the relative economic conditions generated by Republicans and Democrats for predictive meaning (Democrats have done better since World War II, they found)."

"But the reality is that presidents have far less control over the economy than you might imagine. Presidential economic records are highly dependent on the dumb luck of where the nation is in the economic cycle. And the White House has no control over the demographic and technological forces that influence the economy.

"Even in areas where the president really does have power to shape the economy — appointing Federal Reserve governors, steering fiscal and regulatory policy, responding to crises and external shocks — the relationship between presidential action and economic outcome is often uncertain and hard to prove."

~ Neil Irwin

Source: his New York Times column, "Presidents Have Less Power Over the Economy Than You Might Think," posted 1/17/17 at The New York Times.

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Neil Irwin is a senior economics correspondent for The New York Times, where he writes for The Upshot, a Times site for analysis of politics, economics and more.

January 17, 2017

Real Estate Assessments Up: Residential 2.3%, Hotels 6%

The Arlington Sun Gazette reports on Arlington County's 2017 real estate property assessments, which were released last Friday., writing:

"Modest assessment increases in both the residential and commercial segments of the  real estate market were reported by Arlington government officials on Jan. 13. But property owners will have to wait until later in the spring to see what their 2017 tax bills will look like.

"The average assessed value of all residential properties – single-family, attached and condominiums – for 2017 is $617,200, up 2.3 percent from $603,500 a year before. That increase seems in line with the local real estate market, which saw relatively strong sales in 2016 but no great bump up in average prices.

"The average assessment on commercial property in the county rose 3.4 percent, with about half the increase due to new construction and much of the rest due to higher assessments on hotels. The apartment and office-building sectors were relatively flat."

The weekly newspaper also points out that in "most jurisdictions, where commercial property represents a quarter or less of overall assessed value, Arlington’s tax base is roughly evenly split between residential and commercial."

Arlington Countty's January 13 press release is here. It says "property values up modestly," and includes five bullet points:

  • Overall increase of 2.9 percent
  • Average residential property up 2.3 percent, to $617,200
  • New constructions slightly boosts office value, up 0.6 percent
  • 6 percent growth in existing hotel property values
  • 2017 assessments available online at 11 p.m. Friday, Jan. 13

The press release also notes the following about commercial property assessments:

"Commercial properties, including office buildings, apartments, hotels and retail, increased 3.4 percent. The increase was fueled by 1.6 percent growth from new construction across the commercial sectors and by 14.6 percent growth in existing hotels, reflecting the strength of Arlington’s tourism market. Existing office property values remained flat, while existing apartments increased 1.9 percent — these two sectors represent 82 percent of the commercial tax base."

In addition, the press release provides the following information about the FY 2018 budget outlook:

"Arlington, like all local governments in Virginia, relies heavily on revenue generated from real estate property taxes to fund services to residents, tourists and employees of the businesses located here.

"As the County develops its Fiscal Year 2018 Budget (the fiscal year runs from July 2017 through June 2018), it faces pressures from Metro and from Arlington Public Schools. As the County continues to experience population growth, particularly along the Metro corridors, and growth in student enrollment, there is increasing demand for existing and new services and for new facilities.

"Maintaining the Metro system is critical for the economic health and growth of our community and for Arlington’s environmental sustainability. With the Washington Metropolitan Transportation Authority (WMATA) facing unprecedented budget pressures and maintenance needs, we expect contributions from local jurisdictions to significantly increase in FY 2018, putting more pressure on our budget. Arlington will continue to work closely with WMATA and our jurisdictional partners to resolve WMATA’s budget gap.

"The challenge facing the County and Schools as they approach the FY 2018 budget is that revenue is expected to be less than projected expenditures."

Finally, the county makes the following points about real estate assessments:

"Real estate assessments are appraisals. They are the County’s opinions of value for each parcel of real property in Arlington. The assessments are made using accepted methods, standards and techniques of the real estate appraisal and assessment profession. For more information, visit the County webpages on real estate assessments." (embedded link from the original). Information about assessment appeals can be found there.

Will wonders never cease? Once again, the Arlington County Board looks set to read a windfall from the rising assessments, which is exactly why local jurisdictions in Virginia are required to compute -- before budget adoption in the Spring -- an effective tax rate increase.

Given the implications for taxpayers, Growls readers may want to direct questions to the Arlington County Board. Just click-on the link below:

  • Call the School Board office at (703) 228-6015

And tell them ACTA sent you.

January 16, 2017

Dead People Doling Out Food Stamps

At the Washington Free Beacon last Friday, Elizabeth Harrington reported the findings of a recent U.S. Department of Agriculture (USDA) Inspector General report, writing, "Dead retailers redeemed more than $2 billion worth of food stamps, according to a new audit."

She explains, writing:

"The U.S. Department of Agriculture’s inspector general reviewed billions of transactions through the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps. It found that thousands of stores authorized to accept food stamps were using the Social Security numbers of deceased persons.

"An audit released Thursday found instances of potential fraud where the Food and Nutrition Service issued food stamps through stores that claimed to be owned by children or the dead.

“We found that 3,394 authorized SNAP retailers (retailers) used Social Security Numbers (SSN) that matched SSNs of deceased people,” the inspector general said. “Additionally, 193 retailers listed owners who were not at least 18 years of age. While FNS did have some controls to edit or verify SNAP retail owner information, these controls were not adequate to ensure owner information accuracy.”

"Between October 2013 and June 2015, the inspector general identified 3,394 stores owned by 1,819 people who were using SSNs listed on the Social Security Administration’s Death Master File.

“These 3,394 retailers redeemed about $2.6 billion in SNAP benefits,” the inspector general said. The 193 businesses that reported child owners redeemed $41 million in food stamps.

 “Without accurate retail owner data such as birth dates and SSNs, [the Food and Nutrition Service] FNS has little assurance that retailers are who they say they are,” the inspector general said. “This could leave the program open to abuse by disqualified individuals and others wishing to hide their identity for possible fraudulent purposes.”

For context, Harrington provided the following program information:

"An average of 46 million Americans receive food stamps every month through the food stamp program, which costs $70 billion per year.

"For the audit, the inspector general reviewed roughly 280,000 retailers responsible for 1.56 billion food stamp transactions worth $23 billion."

In conclusion, Harrington wrote:

"The government said it is reviewing the 1,819 owners using the SSNs of dead people.

"So far the department has reviewed 147 owners and removed 122, or 83 percent, from the program.

"Of the remaining stores, seven are no longer authorized to redeem food stamps for other violations. Eighteen cases were found to be valid; in some of these cases, the business owner had died but the business was still operated by the deceased owners’ spouse."

The entire USDA Inspector General 29-page report is available here. The OIG also wrote in their audit:

"(Food & Nutrition Service) uses two information systems to administer SNAP—STARS and ALERT. Both systems should reflect the same monetary data. However, we found that, of the 243,595 retailers authorized during the period of our review, 241 retailers recorded different monthly transaction totals in the two systems. For the 21 months of data we compared, these discrepancies totaled about $43 million.

"FNS generally concurred with our recommendations and OIG was able to accept management decision for all 7 recommendations."

If you have a few minutes, write your member of Congress. Tell them the food stamp program needs to be run like a business. Contact information is available at the Library of Congress' Congress.gov. Taxpayers living in Virginia's Arlington County can contact:

  • Senator Mark Warner (D) -- write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376

Ask for a written response. And tell them ACTA sent you.

January 14, 2017

A Thought on Bureacracy and Capitalism

"What must be realized is that the strait jacket of bureaucratic organization paralyzes the individual’s initiative, while within the capitalist market society an innovator still has a chance to succeed. The former makes for stagnation and preservation of inveterate methods, the latter makes for progress and improvement. Capitalism is progressive, socialism is not.

"The champions of socialism call themselves progressives, but they recommend a system which is characterized by rigid observance of routine and by a resistance to every kind of improvement. They call themselves liberals, but they are intent upon abolishing liberty. They call themselves democrats, but they yearn for dictatorship. They call themselves revolutionaries, but they want to make the government omnipotent. They promise the blessings of the Garden of Eden, but they plan to transform the world into a gigantic post office. Every man but one a subordinate clerk in a bureau, what an alluring utopia! What a noble cause to fight for!

"Against all this frenzy of agitation there is but one weapon available: reason. Just common sense is needed to prevent man from falling prey to illusory fantasies and empty catchwords." (emphasis in the original)

~ Ludwig von Mises

Source: his 1944 book, Bureaucracy. (see the 1/8/17 Carpe Diem post for the embedded link to the e-book).

HT Mark Perry's 1/8/17 Carpe Diem blog at the American Enterprise Institute.

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Ludwig von Mises was one of the last members of the original Austrian School of Economics. He earned his doctorate in law and economics from the University of Vienna in 1906. One of his best works, The Theory of Money and Credit, was published in 1912 and was used as a money and banking textbook for the next two decades. Encyclopedia at tthe Library of Economics and Liberty.

January 13, 2017

4th Qtr of 2016 Adds $208 Billion to National Debt

CNS News' Terry Jeffrey reported yesterday on the Treasury's December 2016 Monthly Statement, noting, "The federal government collected $740,771,000,000 in taxes in the first three months of fiscal 2017 (October through December) . . . But at the same time, it spent $949,130,000,000 -- thus running a deficit of $208,359,000,000."

He also reported:

"There were 152,111,000 people employed in the United States in December, according to the Bureau of Labor Statistics. That means that the $740,771,000,000 in tax revenues collected in the first three months of fiscal 2017 equaled about $4,870 per worker.

"The $208,359,000,000 deficit equaled about $1,370 per worker.

"The biggest source of federal revenues in the first three months of fiscal 2017 was the individual income tax, which brought in $352,837,000,000. The second biggest source was Social Security and other payroll taxes which brought in $252,132,000,000. The third biggest source was the corporation income tax, which brought in $75,731,000,000.

"Customs duties brought in only $8,812,000,000 in the first three months of fiscal 2017.

"Thus, the $75,731,000,000 in income taxes paid by corporations in the U.S. was 8.6 times as great as the $8,812,000,000 in customs duties paid on foreign products brought into the United States."

The chart below, from Jeffrey's report, provides a picture of the cumulative receipts, outlays, and deficit for FY 2017:


As we growled just last week, the national debt on December 30, 2016 was just under $20 trillion, and had increased $1 trillion in 2016. We also growled the national debt increased $9.3 trillion during President Obama's presidency, or $75,553.84 per household.

We also growled in September 2016, citing a report from the Committee for a Responsible Federal Budget, that "(s)ince 1970, there has been a recession every 5 1/2 years on average," and "that one has not occurred in the last 7 years suggest(ing) one is likely on the horizon."

Almost three years ago, we growled that global debt exceeds $100 trillion. For a 'map' showing the U.S. share of the world debt, see our December 18, 2016 Growls.

Finally, we growled last September that we could have avoided the national debt added during the last eight years if federal taxes had been increased 44$.

So, if you have a few minutes, write your member of Congress. Tell them your position on the national debt. Contact information is available at the Library of Congress' Congress.gov. Taxpayers living in Virginia's Arlington County can contact:

  • Senator Mark Warner (D) -- write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376

Ask for a written response. And tell them ACTA sent you.

January 12, 2017

Arlington School Board on having Own Taxing Authority

The Arlington School Board is taking a "wait and see" attitude on a proposed "constitutional amendment that would eliminate the current prohibition on elected School Boards levying taxes in Virginia’s 133 cities and counties. The measure would not require school districts to assume taxing powers, but would allow the General Assembly to permit any elected School Board to impose taxes on real estate," according to a report this morning by Scott McCaffrey in the online Arlington Sun Gazette.

The proposed constitutional amendment is patroned by Del. Mark Cole (R-Fredericksburg).

Here's the context for McCaffrey's story:

"Even if Cole was gung-ho for the measure – and more on that later – it would face a decidedly uphill battle. The proposed amendment would first have to win passage in the conservative-dominated General Assembly this year, then be passed again in a subsequent year, then be voted on in a statewide referendum.

"That Cole’s heart may not be fully engaged in the effort is summed up in two words (“By Request”) that are attached to the bill, Richmond-speak for measures that sometimes have been introduced largely to placate a constituent group.

"Arlington first was granted an elected School Board by the General Assembly in 1947. But that authority was taken away in the wake of Virginia’s efforts to retain segregated schools, with the last Arlington School Board election held in 1955. It was not until the early 1990s that Arlington would have that right restored.

"As part of the deal brokered in the General Assembly 25 years ago to allow elected schools boards, the bodies were not permitted independent taxing authority, instead relying on the government body for most of their funding. About 80 percent of Arlington’s roughly $600 million school budget is funded by the County Board.

"Would School Board members want to change the current arrangement? At least one says no."

He quotes School Board Vice-Chair Barbara Kanninen saying, "We have a good, collaborative relationship with the County Board and have found them, as well as our community, to be supportive of our school budget . . . . Given this, I don’t see any particular advantages of having our own taxing authority in Arlington.”

McCaffrey then includes comments from your humble scribe, writing:

"Tim Wise, president of the Arlington County Taxpayers Association, says giving taxing powers could cut one of two ways.

“In theory, giving the local School Board its own taxing authority should increase accountability,” he said. “However, taxpayers would likely find themselves shouldering a heavier overall tax burden, since the local public schools would be seen as just another layer of taxation.”

“Meanwhile, knowing there was no ‘competition’ for tax dollars, the affordable housing crowd and parks advocates would push the County Board to fund their particular special interests – increasing the overall level of taxation,” Wise said."

Consider that in Arlington County, the schools will never give up a penny or two of “their tax rate" even though a staff analysis (topic B-7) for the Arlington County Board this past spring found that if the cost per student was reduced “to be at the same level as other Northern Virginia jurisdictions,” the Arlington County real estate tax rate could be significantly “adjusted down and the tax burden would be less for the average homeowner.” For example, if the cost per student for Arlington students was reduced to the amount spent in the Alexandria schools, the Arlington tax rate could be reduced by 7 cents, thus reducing the average homeowner’s annual tax burden by $445. Reducing the cost per student to the level in Fairfax County would result in reducing the Arlington County tax rate by 18 cents, and the annual tax burden by $1.060.

According to the county staff analysis, the impact on the tax rate ranged from Alexandria's 7 cents to a 28 cent reduction in the real estate tax rate if the Arlington School Board was able to reduce the cost-per-student to that in the Stafford County Public Schools. The impact on the annual Arlington County homeowners' tax bill would be $1,708.

Given the implications for taxpayers, Growls readers may want to direct questions to the Arlington School Board. And tell them they need to run the schools more economically rather than having additional taxing authority. Just click-on the link below:

  • Call the School Board office at (703) 228-6015

And tell them ACTA sent you.

January 11, 2017

Virginia Ranks #49 in Reliance on Federal Aid

At the Tax Foundation's Tax Policy Blog today, policy analyst Morgani Scarboro reminds us, "State-level taxes may be the most visible source of state government revenues for most taxpayers, but it’s important to remember that they are not the only source of state revenue. State governments also receive a significant amount of assistance from the federal government in the form of federal grants-in-aid."

She continues by explaining (see original for embedded links):

"In fiscal year 2014, over 60 percent of federal spending in the states went to benefits payments to individuals, including Social Security and Medicare. Aid is also given to states for education, transportation, housing, agriculture and more. Medicare is the largest grant program and continues to grow. Federal aid to states as a whole also grew 25 percent (adjusted for inflation) from 2005 to 2014.

"States differ in the amount of federal aid they receive. The top recipient of federal aid per capita in FY 2014 was Mississippi, which relied on federal assistance for 40.9 percent of its revenue. Other states heavily reliant on federal assistance include Louisiana (40.1 percent), Tennessee (39.9 percent), Montana (39.1 percent), and Kentucky (38.5 percent). As we have previously noted, these states, and others that rely heavily on federal assistance, tend to have modest tax collections and a relatively large low-income population.

"Other states have comparatively low reliance on federal aid. North Dakota relies on federal assistance for only 16.8 percent of its general revenue. Other less-reliant states include Virginia (22.8 percent), Connecticut (24.6 percent), Nevada (24.8 percent), and Hawaii (24.8 percent). Trends in these states are opposite those in federal aid-heavy states; they typically have higher tax revenues and a smaller low-income population. Nevada is somewhat of an outlier, however, as it is able to export a large portion of its tax burden through sales taxes due to tourism. North Dakota is also able to export much of its tax burden, through severance taxes."

Her post includes the map below that shows which states in FY 2014 rely the most on federal aid (as a percentage of state general revenue):

While Virginia ranked #49, the states that ranked in the top ten in relying on federal aid were:

#1 -- Mississippi
#2 -- Louisiana
#3 -- Tennessee
#4 -- Montana
#5 -- Kentucky
#6 -- Missouri
#7 -- South Dakota
#8 -- Georgia
#9 -- Maine
#10 -- Oregon

It seems that when the incoming Trump administration starts working on jobs creation, some of their focus should be on creating jobs in the 10 states listed above.

Take a few minutes to tell your representatives on Capitol Hill that Congress needs to work closely with the Trump Administration on job creation by cutting taxes, eliminating inefficient regulations, and education that better meets employer needs. For those not living in Arlington County, contact information is available at the Library of Congress' Congress.gov. Taxpayers living in Virginia's Arlington County can contact their members of Congress by just clicking-on the embedded link:

  • Senator Mark Warner (D) -- write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376

And tell them ACTA sent you!

For more information about the Tax Foundation, click here. To browse the Tax Foundation website, click here.

January 10, 2017

Getting More Blood Out of the Proverbial Turnip

The Arlington Sun Gazette's Scott McCaffrey has an online story this morning that cites Arlington County officials saying the "Quest for community benefits is a zero-sum game."

Here's how McCaffrey begins:

"Despite more hands seeking “community benefits” from new development, Arlington leaders are warning that they are only able to wring so much out of those proposing new buildings.

"Advocates for schools have been pressing County Board members to seek funding from developers whose projects will bring more students to local classrooms. Currently, while the county government seeks an array of community benefits – from transportation improvements to public art – school funding has not been sought.

"County Board Chairman Jay Fisette said that while school support may someday be part of the mix, it would come in place of, not in addition to, other types of benefits.

"“The pie isn’t growing – you are not looking at a larger pie,” Fisette said at the board’s Jan. 3 meeting with the Arlington County Civic Federation.

"Under Arlington’s site-plan development policy, those seeking improved density from the county government often are asked for something in return – the so-called community benefits. Generally the county’s requests have been for improvements that benefit the immediate surroundings of the project – maybe paying for a stoplight, undergrounding of utilities or the development of a small park on site – but advocates are now pushing for the government to broaden its reach, looking at the impact of development on whole neighborhoods or countywide."

He ends by writing:

"We’ve got some policy issues to contend with, we’ve got some legal issues," County Board member John Vihstadt said.

"Board members said they would be back with more specifics later in the year.

“We want to work with everybody,” Vihstadt said. “We are not shutting down the conversation.”

Time to remind readers of the wisdom of Thomas Sowell? According to Sowell, "The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.” Looks like even in the nation's 8th richest county, there's a limit to how much the Arlington County Board can squeeze from Arlington County taxpayers.

Growls readers wishing to comment on the County Board's policies concerning so-called community benefits are urged to write to members of the Arlington County Board. Just click-on the link below:

  • Call the County Board office at (703) 228-3130

And tell them ACTA sent you.

January 08, 2017

Sears "was the Amzaon of its Day"

Investors' Business Daily's Terry Jones provides some business history in his commentary this weekend, writing "Sears, Other Retailers Reel From Gales Of 'Creative Destruction.'"

According to Jones:

"Sears. Macy's. Kohl's. Traditional department store retailers have taken hard hits over the Christmas holidays, with sales lagging the generally robust performance of retailers overall. Now, these mall stalwarts are slashing thousands of jobs and hundreds of stores, trying to right-size themselves. It's no coincidence.

"Sears on Thursday became the latest retailer to announce that it was restructuring after a weak Christmas season. It's closing 150 Sears and Kmart stores and selling its iconic Craftsman tool brand for just under a billion dollars to Stanley Black & Decker. Meanwhile, Macy's is letting 10,000 people go. And Kohl's warned about its decline in sales over the holidays. Analysts expect Kohl's to announce cuts.

"A few years back, it was discounter Wal-Mart, the biggest retailer on earth, announcing it was closing 100 stores.

"What's going on here? In a word, Amazon.com.

"The online e-retailing giant has become a dominant force in the retailing business, removing millions of customers from the nation's malls and letting them do their shopping online at bedrock discount prices. So-called brick-and-mortar stores are vulnerable to this technology-driven wave of "creative destruction" sweeping the industry.

"It's impossible to exaggerate how rapid and total Amazon's vault to dominance has been. As recently as 2004, it had just $6.9 billion in sales. By 2015, that was $107 billion. For 2016, estimates put Amazon sales at over $130 billion.

"In Sears' case, its dilemma is a tad ironic, since it was the Amazon of its day. (emphasis added)

"That's right, Sears began its existence as a mail-order catalog company in 1886. At the time, Sears' innovative business model hurt other traditional retailers, which had to pay rent and hire clerks, with very slim profit margins. This was a time of great innovation and change. Edison's light bulb basically put the gaslamp industry out of business. Henry Ford's cheap automobiles killed the horse-and-buggy industry.

"In short, while old industries were dying, new innovative ones were springing up. That's the story of America's economy."

If you're not familiar with the phrase 'creative destruction,' Jones writes:

" . . . retailing is only one of many industries affected by changes wrought by the internet, cellphones, tablets and desktop computers and other technologies. Suffice to say, virtually all industries now have a dramatically changed relationship with their customers and suppliers from just 20 or even 10 years ago.

"This is what the early 20th century economist Joseph Schumpeter called "gales of creative destruction," in which technology or changing economic dynamics force dramatic changes on established industries, wreaking havoc before bringing renewed growth. (emphasis added)

"Yes, this creative destruction leads to layoffs, business closures, investment losses and radical shifts in business survival strategies. Sadly, those that can't adapt go out of business or are acquired or restructure themselves beyond recognition.

"But, as brutal as it sounds, this is actually a good thing, because it creates greater opportunities, cheaper and better goods, and ultimately frees up resources for other, more productive uses . . . ."

Jones includes an embedded link to Schumpeter's Wikipedia entry. For additional background on Schumpeter, visit his entry at the Library of Economics and Liberty, or the Library's article on 'creative destruction' by Michael Cox and Richard Alm.

If you haven't read Jones' commentaries before, or you're not a fan of Investors' Business Daily (IBD), take a few minutes to read Jones entire commentary or browse the IBD website.

January 06, 2017

A Thought about Taxation

"It is a singular advantage of taxes on articles of consumption that they contain in their own nature a security against excess. They prescribe their own limit, which cannot be exceeded without defeating the end purposed - that is, an extension of the revenue."

~ Alexander Hamilton, Federalist No. 21

Source: Founders' Quote Database, The Patriot Post.

January 05, 2017

Conservatives Outnumber Liberals, but Margin Narrows

In case you needed further proof the Peoples Republic of Arlington is indeed a demographic outlier when it comes to politics, one needs only look at Gallup's latest political survey. Three highlights from the story released Tuesday:

  • 36% of Americans now conservative, 25% liberal
  • Liberal figure has inched up from 17% in 1990s
  • Conservatives mainly steady, while moderates decline

The lede in Lydia Saad's story:

"Many more Americans have considered themselves politically conservative than liberal since the early 1990s. That remained the case in 2016, when an average of 36% of U.S. adults throughout the year identified themselves as conservative and 25% as liberal. Yet that 11-percentage-point margin is half of what it was at its peak in 1996 and is down from 14 points only two years ago."

The following chart from the Gallup story shows Americans political views, by year:

The story is information-rich, and includes the "survey methods."

The bottom line for Gallup is:

"More Americans continue to label themselves as conservative than as moderate or liberal. However, the liberal percentage has been growing, mainly at the expense of moderates. The Democratic focus of this change represents a hardening of political polarization between the two major parties. With most Republicans already identifying as conservative and more Democrats identifying as liberal, the parties are moving further apart ideologically.

"The most obvious implication of this after the 2016 election is that the parties may increasingly nominate candidates who are wholly unacceptable to the opposing party. Additionally, it may be affecting the ideological bent of Americans' representatives in Congress and the pressure these leaders face from their constituents to adhere to conservative versus liberal orthodoxy.

"On the other hand, if the term "liberal" is simply growing in public acceptance, the shift could be more a matter of semantics than a paradigm change. People who once opted for the word "moderate" may be more willing to call themselves "liberal" even if their views on the issues are the same. However, with major changes over the past two decades in Americans' acceptance of gay marriage, support for legalized marijuana and growing opposition to the death penalty, at least some of the shift in labeling appears to be rooted in changing perspectives."

HT for the story comes from Power Line where John Hinderaker observes:

"Conservative identification has remained essentially steady, but these days there are fewer moderates and more liberals. Why?

"I am not sure that the shift reflects a real change in political attitudes. Rather, I think that in the aftermath of the Reagan years, it was political suicide to call oneself a liberal. A lot of professed “moderates” really belonged to the ideology that, in those days, dared not speak its name. In recent years, as the opprobrium attached to the label “liberal” has faded, more liberals have come out of the closet.

"A more serious question is, if there are so many more conservatives than liberals, why don’t we do better politically? The answer is, I think, some combination of the following: 1) Liberals dominate influential positions in the press, universities, big business, and the arts (Hollywood, television, the music industry, etc.). 2) Liberals vote loyally and monolithically for Democrats, while conservatives are more critical of the Republican Party and are more apt to vote selectively, or not at all–and even, in a fair number of inexplicable cases, for Democrats. 3) Liberals tend to have financial interests at stake that make them more dedicated to politics than conservatives. 4) Because they love government–or possibly for some more arcane reason–liberal politicians tend to be more adept than conservative politicians. 5) Conservatives actually do do well, and in fact are ascendant at present. So quit complaining."

Think the Peoples Republic of Arlington (PRA) is not an outlier? Take a look at recent Arlington County election results. The four bond issues on the November 2016 ballot passed by taking an average of nearly 77% of the 'yes' votes while the Democratic candidates for President/Vice-President took 75% of the vote.

January 04, 2017

Large City, Small City and the Risk to Taxpayers

Todd Ackerman of the Houston Chronicle reported on Friday, "Houston's liabilities outweigh its assets by $95 million, the first time the city has ended its fiscal year with a deficit, according to a 2016 annual audit released Friday."

He continued reporting, writing:

"Attributing the deficit to the continued growth of Houston's pension obligations, Mayor Sylvester Turner and City Controller Chris Brown used the results to call on the 2017 Texas Legislature to pass their proposed pension reform plan as soon as possible. City Council in October approved the proposal, whose measures were designed to eliminate nearly $8 billion in pension under-funding over 30 years.

"We will not sugar-coat this ongoing trend, which is the reason I have prioritized pension reform and financial stability through the first year of my administration," Turner said in a statement Friday. "We must have meaningful pension reform and we must have a strategic long-term plan to achieve sustainable structural budget balance, where the city does not spend more than it receives in revenue each year."

"Brown added that "a crisis continues to loom on the horizon."

"Turner emphasized that "it's important for the people of Houston to know the city can still pay its bills." According to the audit, Houston had more than $2.37 billion in cash available as of June 30, the end of the fiscal year.

"Still, the city's financial woes have been mounting. Last year's audit showed Houston's mid-2015 assets outweighed its liabilities by only $146 million, a reflection of changed reporting rules and rising pension liabilities. Turner began calling attention to the pension problem immediately upon taking office in January and subsequently made pension reform a linchpin of his mayoralty."

One pundit, a Houston council member, observed, "We don't have a revenue problem, we have an expense problem . . . We spend more than we take in." What wisdom!

The Chronicle reporter also pointed out:

"The audit, like last year's, reflects required greater transparency of long-term pension obligations.

'Through 2014, the city had to report only the gap between the annual payment required to fully fund each pension and the lower payment it was making. Since 2015, cities have to report the gap between the projected cost of all employee retirement benefits and the cash the city has set aside to pay those benefits."

Spero News also pointed out that Houston is America's fourth-largest city, and the deficit is the city's first since it was founded in 1836.

Although we didn't growl about it last August, your humble scribe has been following the "financial crisis" of Petersburg, Virginia (2010 population of 32,420, according to Wikipedia)

According to an early report of Petersburg's financial crisis in the Petersburg Progress-Index, Michael Buettner reported on August 3, 2015:

"The city's fiscal hole is deeper than previously thought, and urgent action is needed to stop it from growing and restore lenders' confidence in the city's ability to meet its financial obligations.

"Those were among the key findings in reports presented Wednesday to City Council by finance experts from a state team and two private companies that were brought in to help Petersburg officials avert a looming financial crisis.

"The mission of the state team, led by Virginia Secretary of Finance Richard D. Brown, is to formulate a list of "priority actions to deal with some of the fiscal difficulties the city is facing going forward," Brown told City Council during a special meeting at the Petersburg Station multimodal transit center.

"Those "difficulties" became starkly apparent in late June, with a loan payment due on June 30, the end of the city's fiscal year. According to Brown, it was "questionable as of June 29" whether the payment could be made, but he said his team helped the city avoid defaulting on the loan.

"However, Brown said, the city's total of unpaid bills on June 30 amounted to $18.8 million, higher than the estimate of $17 million given to City Council on July 11 by Interim City Manager Dironna Moore Belton. That total includes about $4.1 million in funds owed by one city budget fund to another, including $2.8 million owed by the city to the school system.

"Brown said the city's problems have evolved over the past several years. As the Progress-Index first reported in February, the city has consistently overestimated its revenue and underestimated its spending since at least 2011."

Buettner also quoted Virginia's Secretary of Finance who said, "A big part of the problem . . . is a lack of control over, and information about, spending by city departments." In addition, Brown "said there are more than 30 "exit points" in the city government, people who are authorized to spend city money, and 'very little information about what's going out.'"

For additional information about Petersburg's financial crisis, see this Richmond Times-Dispatch story, dated August 3, 2016.

For the latest information, see this December Progress-Index story, or this December Virginian Pilot editorial.

Arlington County taxpayers wishing to read the county's new FY 2016 Comprehensive Annual Financial Report (CAFR) is available on the Accounting webpage.

Growls readers wishing to comment on the FY 2016 CAFR or have questions about the county's accounting and financial practices are urged to write to members of the Arlington County Board. Just click-on the link below:

  • Call the County Board office at (703) 228-3130

And tell them ACTA sent you.

UPDATE (1/12/17): In a story posted Tuesday, the Richmond Times-Dispatch's Burnell Evans reports on Petersburg's continuing 'budget tumult,' writing:

"The updated outlook of Petersburg’s finances presented halfway through the fiscal year Tuesday by turnaround consultants with the Washington-based Robert Bobb Group remained tenuous.

"The fiscal plan Petersburg has been working from since the City Council’s first attempt to strip $12 million from an outsized budget in September no longer is accurate, Bobb Group workers said.

"Some elements of those decisions — slashing funding for schools, canceling a youth summer program and boosting trash fees — yielded savings, but not every plan materialized, according to an analysis presented Tuesday.

"That — coupled with past-due payments to companies taken from the current year’s budget for last year’s bills — likely will result in another round of belt-tightening at next week’s council meeting. But the fixes also include a partial restoration of a 10 percent reduction in municipal worker salaries targeted toward making whole the city’s public safety workers."

January 03, 2017

More EOY Data Points -- Federal Debt Climbs $1 Trillion

At CNS News, Terry Jeffrey reported this evening that "federal debt climbed by more than a trillion dollars during 2016, according to data released today by the U.S. Treasury."

He continues, writing:

"On Dec. 31, 2015, the last business day of 2015, the federal debt was $18,922,179,009,420.89. On Dec. 30, 2016, the last business day of 2016, it was $19,976,826,951,047.80.

"The one-year increase in the federal debt during calendar year 2016 was therefore $1,054,647,941,626.91.

"That increase in the debt equaled $8,860.65 for each of the 119,026,000 households the Census Bureau estimated there were in the United States as of September. (emphasis added)

"During President Barack Obama’s time in office the federal debt has increased by $9,349,949,902,134.72—rising from  $10,626,877,048,913.08 on Jan. 20, 2009, the day of Obama’s inauguration, to $19,976,826,951,047.80 on the last day of 2016.

"That equals $78,553.84 for each of the 119,026,000 households in the country as of September. (emphasis added)

"During 2016, while Democratic President Barack Obama controlled the White House, Republicans controlled both houses of Congress."

Jeffrey's report included the following chart showing how debt climbed during the eight years of the administration of President Barack Obama:

Do you know the position on federal debt held by your representatives in Congress? If not, take a couple of minutes to tell them. For those not living in Arlington County, contact information is available at the Library of Congress' Congress.gov. Taxpayers living in Virginia's Arlington County can contact their members of Congress just by clicking-on the embedded link below:

  • Senator Mark Warner (D) -- write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376

And tell them ACTA sent you!

January 02, 2017

Arlington + Falls Church Tie for Lowest Unemployment Rate

The Arlington Sun Gazette reported yesterday that Arlington County and its Northern Virginia neighbor, Falls Church, share the 'pole position' for the lowest November unemployment rates in the Commonwealth.

Your humble scribe's favorite Arlington news source went on to report:

"With 142,725 county residents employed in the civilian workforce and 3,981 seeking work, the county’s unemployment rate of 2.7 percent was down from 2.8 percent in October and, with its neighbor Falls Church, was lowest among Virginia’s 133 cities and counties.

"Figures were reported Dec. 29 by the Virginia Employment Commission.

"Across the region, non-seasonally-adjusted joblessness was generally down a tick or two from October, declining from 3 percent to 2.7 percent in Falls Church; from 3.1 percent to 3 percent in Alexandria; from 3.4 percent to 3.2 percent in both Fairfax and Loudoun counties; and from 3.8 percent to 3.6 percent in Prince William County.

"In Northern Virginia as a whole, the jobless rate of 3.3 percent was down from 3.5 percent a month before, representing 1.53 million employed in the civilian workforce and 168,000 looking for jobs.

"Statewide, November’s jobless rate was 4 percent, down slightly from the rate of 4.1 percent a month before."

The Sun Gazette also reported:

"Among Virginia’s cities and counties, the lowest jobless rates were reported in Arlington, Falls Church, Madison County (2.9 percent) and, tied at 3 percent, Alexandria and the city of Fairfax. The highest rates could be found in Buchanan County (9.5 percent), Dickenson County (9.1 percent), Wise County (8.2 percent), Petersburg (7.3 percent) and Tazewell County (7.2 percent).

"Among metro areas across the commonwealth, Northern Virginia had the lowest reported joblessness, at 3.3 percent, followed by Charlottesville (3.4 percent) and Winchester (3.5 percent). The highest rates were found in Kingsport/Bristol (4.7 percent) and Hampton Roads (4.5 percent)."

The newspaper included the following table in its report:

For additional labor market information for Virginia, see this 4-page press release from the Virginia Employment Commission,  or the Virginia Labor Market Information website.

January 01, 2017

U.S. Economic Confidence Inches Up to New High

Gallup's Jason McCarthy reported on December 20, 2016, "Americans' confidence in the economy continues to gradually strengthen after last month's post-election surge. Gallup's U.S. Economic Confidence Index averaged +10 for the week ending Dec. 18, marking another new high in its nine-year trend."

McCarthy also reported:

"The latest figure is up slightly from the index's previous high of +8 recorded in both of the prior two weeks. The first positive double-digit index score since the inception of Gallup Daily tracking in 2008 reflects a stark change in Americans' confidence in the U.S. economy from the negative views they expressed in most weeks over the past nine years.

"Last month's election of Donald Trump not only marked a change in the country's political power structure but also significantly improved Republicans' economic confidence -- pushing the index into positive territory for the first time since March 2015.

"Gallup's U.S. Economic Confidence Index is the average of two components: how Americans rate current economic conditions and whether they feel the economy is improving or getting worse. The index has a theoretical maximum of +100 if all Americans were to say the economy is doing well and improving, and a theoretical minimum of -100 if all Americans were to say the economy is doing poorly and getting worse.

"Americans' assessments of current conditions and their outlook for the economy are the most positive they have been in nine years. Thirty-one percent of Americans rated the economy as "excellent" or "good" last week, while 22% said it was "poor," resulting in a current conditions score of +9."

The following chart is one of two from the Gallup report, and shows the weekly averages of Gallup's Economic Confidence Index for the period from January 2008 through December 18, 2016:

The "bottom line" for McCarthy is:

"The new political course for the U.S. has spurred public confidence in the economy, but Americans also have other solid reasons to feel optimistic about the nation's economic health. After a strong third quarter report from the Commerce Department and the lowest unemployment rate in over nine years, the Dow Jones industrial average flirts with a record-breaking 20,000 index score.

"If Americans' confidence persists or even increases in 2017, it could mark a strong first year for the incoming president. But it wasn't long ago that Americans' views of the economy were decidedly negative, and their confidence has been known to retreat in the midst of national political drama -- serving as a reminder that confidence is fragile.

"Economic confidence is higher than Gallup has seen in years, but it could slip once Trump takes office . . . ."

For a description of the 'survey methods' and how 'Gallup U.S. Daily' works, click-on the above link.

Separately, the Associated Press' Emily Swanson and Verena Dobnik report today on an AP New Year's poll, writing:

"Emotionally wrenching politics, foreign conflicts and shootings at home took a toll on Americans in 2016, but they entered 2017 on an optimistic note, according to a new poll that found that a majority believes things are going to get better for the country this year."

Rasmussen Reports (TM) also weighed in on 2017 last Friday, saying, "Americans appear to be a bit more excited about the new year."

Best wishes for a Happy and Prosperous New Year.

UPDATE (1/2/17): On 12/27/16. Bloomberg News reported, "Consumer confidence climbed in December to the highest level since August 2001 as Americans were more upbeat about the outlook than at any time in the last 13 years, according to a report Tuesday from the New York-based Conference Board." The report, by Michelle Jamrisko, made four key points:

  • Confidence index increased to 113.7 (forecast was 109) from a revised 109.4 in November
  • Measure of consumer expectations for the next six months rose to 105.5, the highest since December 2003, from 94.4
  • Present conditions index fell to 126.1 from 132
  • Share of Americans expecting better business conditions six months from now rose to 23.6 percent, the highest since February 2011, from 16.4 percent

We'll update this Growls if we learn of other polling/survey information.