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April 30, 2017

Virginia Ranks #42 in Reliance on the Sales Tax

Thanks to the Tax Foundation last week, we learned that Virginia ranks 42nd among the states in their reliance on sales taxes. According to Morgan Scarboro, "Sales taxes are one of the largest sources of state and local tax revenue. On average, 23.3 percent of state and local tax revenues came from sales taxes in fiscal year 2014."

Compared to the average of 23.3%, Virginia's sales tax collections as a percent of total state and local tax collection in 2014 were 13.7%, ranking Virginia 42nd among the 50 states.

She explains in part:

"Combined state and local sales tax rates vary across states, with combined rates ranging from 9.98 percent in Louisiana to 5.4 percent in Wyoming. Local sales taxes are collected in 38 states. Five states do not have statewide sales taxes: Alaska, Delaware, Montana, New Hampshire, and Oregon. However, Alaska and Montana do allow localities to levy local sales taxes.

"Today’s map shows what percentage of state and local tax collections derive from the sales tax. Washington depends most heavily on the sales tax (45 percent of total tax collections) due to the lack of a corporate or individual income tax rate (although they do levy a harmful gross receipts tax in lieu of the corporate income tax). Tennessee comes in second (41 percent), again because the state does not levy an individual income tax (except on interest and dividends). South Dakota is the third most heavily dependent (40 percent). It also does not impose a corporate or individual income tax."

Importantly, she writes:

"While some think the sales tax rate is the only consideration in the sales tax code, the tax base is equally important. The economy is moving away from goods and toward services, but the sales tax is levied mostly on goods and less on services. Because of this, and exemptions of certain goods (such as groceries and prescription drugs) in the tax base for political reasons, the sales tax base is narrowing. This is harmful because as the sales tax is applied to less of the economy, the sales tax rate must increase to produce the same amount of revenue."

For the record, the first state to have a sales tax was Mississippi, and was created in 1930.

Scarboro's analysis, posted Thursday at the Tax Foundation's Tax Policy blog included the map below showing the extent that each state relies on the sales tax:


Growls readers who believe Virginia should rely less on the sales tax should take a few minutes to write to Governor McAuliffe. Click-on the following link:

Growls readers should also consider writing to their state legislators. The following legislators represent Arlington County in the Virginia General Assembly: Senators (Adam Ebbin, Barbara Favola, or Janet Howell) and Delegates (Rip Sullivan, Patrick Hope, Alfonso Lopez, or Mark Levine). Contact information for members of the General Assembly can be found here  -- use one of the "quick links" to locate the senator and delegate who represent you.

And tell them ACTA sent you.

April 29, 2017

A Thought about Taxation

The institution of taxation is not a civilized but a barbaric method to fund anything . . . it amounts to . . . a gross violation of human liberty."

~ Tibor R. Machan

Source: page 48, "As Certain as Death: Quotations About Taxes," 2010, compiled by Jeffrey L. Yablon, TaxAnalysts.com.

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Tibor R. Machan (1939 - 2016) was a Hoover research fellow, Professor Emeritus, Department of Philosophy, Auburn University, Alabama, and held the R. C. Hoiles Endowed Chair in Business Ethics and Free Enterprise at the Argyros School of Business & Economics, Chapman University. (Profiles, Mises Institute)

April 28, 2017

Federal Spending per Household is How Much?

In 2016, the federal government spent $3.854 trillion, according to Patrick Tyrrell, research coordinator in The Heritage Foundation's Center for Data Analysis, writing yesterday in the Daily Signal. A lot of money, indeed, but how do visualize such a large number?

According to Tyrrell, "It may be easier to picture if we knew how much spending each household would be responsible for if households all put aside an equal amount each year to cover the government’s spendthrift ways." He then writes, "This can also tell us what the average household should be receiving back in goods and services from the government for their tax dollars."

Tyrrell provides some  numbers that are much more understandable (emphasis added):

"The years 2017-2027 are based on the Congressional Budget Office’s January 2017 baseline projections of federal outlays, and estimates from a Harvard study of the number of households likely to be in the U.S. each year.

"If every household in the U.S. paid an equal amount to cover the federal government’s spending in 2016, each household would have paid $30,631 that year alone.

"In the same 2016 inflation-adjusted dollars, each household is now paying 15 percent more than 10 years ago, when the household share of federal spending was $26,622.

"This per household figure will only grow larger, according to official government projections. In 2027, each household’s share of annual spending will have jumped by another 23 percent to $37,715.

"Right now is a good time to ask whether the federal government is a good steward of our tax dollars. Do taxpayers get enough bang for their buck when they pay federal taxes?

"If households are not receiving $30,631 on average in the form of goods and services from their government, they are being shortchanged.

"Yet the federal government borrows more money each year to fly out its oversized doors.

"Federal government deficit spending—the money it spends beyond what it collects in revenues—amounted to $587 billion in 2016, or $4,665 per household."

The following chart is from Tyrrell's Daily Signal article, and "shows the estimated federal spending per household in the U.S. from 2006 to 2027:

Growls readers concerned about America's out-of-control federal budget are urged to make their views about out-of-concern federal spending known to their members of Congress. 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.

April 27, 2017

Corporate Logos Atop the Aquatics Center?

In an Arlington Sun Gazette article today, Scott McCaffrey reports on the efforts of Arlington County Board member John Vihstadt "to have the county government try to recruit sponsors and partners for the planned $60 million aquatics center and fitness facility."

Some Arlington pundits think a better name for this vanity sports facility, though, might be Aquasphere after the ill-fated county arts venue the Artisphere.

Here's McCaffrey's introduction:

"Say you’re flying into or out of Ronald Reagan Washington National Airport. Look down and, atop the Long Bridge Park aquatics center proposed for just north of the airport, the gleaming logo of a corporate sponsor comes into view.

"Maybe it’s Nestlé, which is moving its corporate headquarters to Rosslyn. Boeing would be appropriate, both because of its aviation business and its major office compound in Crystal City. Or perhaps Chico’s Bail Bonds (little humor for fans of “Bad News Bears” on that one).

"Offering to sell, rent or lease space for a corporate logo might be a good way to make money off a captive audience – at least those sitting in window seats – one local elected official believes.

"Arlington County Board member John Vihstadt hasn’t given up on his desire to have the county government try to recruit sponsors and partners for the planned $60 million aquatics center and fitness facility.

“What about selling naming rights on the roof?” he mused at a recent meeting.

"Vihstadt brought the idea up last year, then revived it when County Manager Mark Schwartz brought back the aquatics-center proposal on April 25."

McCaffrey concludes, writing, "Vihstadt also is pushing for consideration of advertising on Arlington Transit (ART) buses, at transit stops and at Capital Bikeshare stations to help raise a little cash. “This needs to be seriously considered,” he said, noting that a progress report on the matter from county staff was due by June."

We're not opposed to either logos or naming rights for these vanity sports facilities at Long Bridge Park. However, we are concerned they will not draw the necessary attendance, but rather prove to be money losers for county taxpayers much like the Artisphere, the ill-fated arts venue in Rosslyn.

We growled about the Aquasphere both on April 25, 2017 based largely on a county press release and on reporting at ARLnow.com. We also growled about the Aquasphere the following day, April 26, 2017, based upon question McCaffrey included in his reporting for the Arlington Sun Gazette.

Do you have concerns or questions about the Aquatics Center or naming rights in particular, or Long Bridge Park in general? If so, Growls readers are encouraged to contact the Arlington County Board. Just click-on the following link:

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

And tell them ACTA sent you.

April 26, 2017

Questions, He has Questions, About the Aquatics Center

Last night, based upon a "breaking news" report at ARLnow.com and a press release from the county's spinmeisters, your humble scribe growled about the County Manager's announcement they were ready to move forward on their efforts to add a swimming pool and fitness center to what they consider their environmental showcase Long Bridge Park, former brownfield land.

According to Wikipedia, "(b)rownfield land is an Anglo-American term used in urban planning to describe land previously used for industrial or commercial purposes with known or suspected pollution including soil contamination due to hazardous waste. Land that is more severely contaminated and has high concentrations of hazardous waste or pollution, such as a Superfund site, does not fall under the brownfield classification. After clean up, such an area can become a community park or business development."

Thankfully, Scott McCaffrey of the Arlington Sun Gazette brought some much needed historical context today in reporting on the County Manager's latest efforts to move forward on the Aquatics Center. His lede begins this way:

"Arlington officials think they’ve found a way to ensure the stalled Long Bridge Park aquatics facility and fitness center gets back on track. But questions remain about how much county taxpayers will be asked to subsidize the facility once it is up and running. (emphasis added)

"County Manager Mark Schwartz and his staff on April 25 outlined a plan what would have a design firm and contractor in place by the end of the year on a project that is slated to cost between $63 million and $67.5 million to build."

McCaffrey began laying out some of those questions, writing:

"The aquatics center/fitness facility has been on hold since 2014, when concerns about high construction and operating costs led then-County Manager Barbara Donnellan to shelve it. Last year, current County Manager Mark Schwartz returned with a downscaled plan more real-world than world-class in nature.

"But while county officials have the cash in hand to build the facility, thanks to voter support in bond referendums held in 2004 and 2012, there remains the question of how much of an operating subsidy will be required once it opens. (emphasis added)

"County Board member John Vihstadt questioned staff on the matter at the April 25 gathering. The staff response: No detailed analysis has been completed since last year’s projection that the facility would run an operating deficit of between a half-million to a million dollars per year – not counting the cost of servicing the construction debt, which could add another $3 million or so to annual costs until it is paid off. (emphasis added)

"Schwartz said that staff time in recent months has been spent on the construction side of the proposal.

“Staff has been working hard,” he said. 'We have a good sense of the schedule.'"

He continued peeling back the historical onion, writing:

"County Board members seemed optimistic, if a tad subdued, as the plan was rolled out for their inspection. Vice Chairman Katie Cristol said the plan “largely looks positive.”

“I’m looking forward to that design competition,” she said.

"Vihstadt, who catapulted to office in 2014 largely due to voter dissatisfaction with high-ticket capital spending projects, asked what happened to Schwartz’s plan of last year to get corporate and philanthropic sponsors to pick up some of the costs. The county manager backed away from that idea – calling the possibilities “limited” at this point – but held out some hope. (emphasis added)

“I’m not going to say ‘never,’” Schwartz said.

"County voters in 2004 gave thumbs up to a bond referendum that, they were told at the time, would cover the entire cost of the Long Bridge Park complex, including sports fields, an esplanade, aquatics center, fitness center, parking and other amenities. But eight years later, there was not enough funding remaining, and county officials were forced to go back to the voters in a second referendum. (emphasis added)

"The verdict from the electorate was a split decision: The 2012 park-bond referendum won support of 63 percent of voters, a landslide by traditional accounting, but ran 20 percentage points behind a school bond on the same ballot.

"Critics derided the ballooning cost of the aquatics center as another example of a county-government vanity project, a list that included the Artisphere arts center, “million-dollar bus stops” on Columbia Pike and the South Arlington streetcar project. (emphasis added)

"In the years since, the streetcar has been shelved, the Artisphere shuttered and the transit stops on Columbia Pike scaled back to about half the original projected cost."

Thankfully, Arlington County citizens and readers of the weekly Arlington Sun Gazette have Scott McCaffrey, who brings much needed historical knowledge and knows the questions to ask.

To read McCaffrey's entire report, click here.

Our August 4, 2016 Growls included links to several other Growls where you can obtain additional historical information about the Aquatics Center.

Do you have concerns or questions about the Aquatics Center in particular, or Long Bridge Park in general? If so, Growls readers are encouraged to contact the Arlington County Board. Just click-on the following link:

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

And tell them ACTA sent you.

UPDATE (4/27/17).  Washington Business Journal reported yesterday on the County Manager's decision to move forward on the Aquasphere (Artisphere + Aquatics Center). The Washington Business Journal article by Michael Neibauer, explains the pros and cons of the "design-build method," which the county will use for the first time:

"The county will use, for the first time, the design-build method, where the chosen contractor is required to meet a budget chosen at the outset. Design-build controls costs, but it also limits the types of programs that can be built into the center.

“We’ve selected design/build as the best way to fulfill the vision for this unique park in the most cost-effective manner," County Manager Mark Schwartz said in a release. 'We are eager to move forward and develop conceptual designs that the public will have an opportunity to weigh-in on this fall.'"

April 25, 2017

Arlington County Moving Ahead with Aquatics Center

In a "breaking" news story shortly after the Arlington County Board's afternoon recessed meeting ended, ARLnow.com reported:

"After a years-long delay caused by anticipated cost overruns, Arlington County says it’s finally ready to move forward with the second phase of the Long Bridge Park project, including a scaled-down aquatics and fitness center."

According to ARLnow.com, the first phase of Long Bridge Park, located at 475 Long Bridge Park -- north of Crystal City, was completed in 2011.

A press release published by Arlington County, and distributed at 8:30 P.M., contains three bullets:
  • Cost-effective design/build construction method
  • Design competition to include community involvement
  • Community-recommended core programs moving forward

The press release goes to great pains to describe how project costs will be limited, pointing out:

"The budget for the total Phase 2 project, as approved by the County Board in the FY 2017-2026 Capital Improvement Plan, is $63 to $67 million, the amount of funding originally approved in 2012.  The final total will depend on decisions made during the design process.  The budget includes, in addition to the aquatics facility, an extension of the esplanade, rain gardens, public gathering spaces, parking, public art and additional environmental remediation." (emphasis added)

The county detailed the next steps, and noted, "The public will review the concepts in November 2017, with the Board then selecting the final design. construction(sic) is expected to begin in late 2018."

Who wouldn't want to build a vanity project in this "showplace of environmentally sound redevelopment of what was once a brownfield by the Potomac?" Only a politician, you say? But then the park includes "an overlook with views of capital monuments, the Wave Arbor public art feature, a rain garden, and more." You say you can already imagine the ribbon-cutting ceremony?

One Arlington pundit suggested that instead of building a new swimming pool for D.C., the Arlington County Board should consider voting to rejoin the original 10 square miles. And "CaptainObvious," commenting at ARLnow.com, wondered if the school capacity issue shouldn't be solved before the county starts building extra pools?

The August 4, 2016 Growls has links to several other Growls where you can obtain historical information about the Aquatics Center.

If you have concerns or questions about the Aquatics Center in particular, or Long Bridge Park in general, Growls readers who are Arlington County taxpayers are encouraged to contact the Arlington County Board. To contact the Board, just click-on the following link:

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

And tell them ACTA sent you.

April 24, 2017

A Thought about the National Debt

"Interest payments currently consume about 6.5 percent of the federal budget, or $266 billion, making it the fifth largest budget line item behind defense, social security, Medicare and Medicaid. (emphasis added)

"In two years, the Office of Management and Budget predicts interest rates will rise to nearly 4 percent, pushing debt service payments to $474 billion, or nearly 10 percent of the federal budget. By 2026, those amounts rise to $787 billion and 12.2 percent of spending.

"And even though we’re dedicating such a huge chunk of federal revenues to the national debt, the amount owed keeps going up, because all we’re paying is the interest, without denting the principal, while we continue to borrow. (emphasis added)

"A nation unwilling to make even the thinnest of spending cuts has to borrow increasing amounts to maintain programs and add new ones, while meeting the rapidly rising debt payments.

"To say this is unsustainable is to state the obvious. But at this point, even a sincere commitment to fiscal discipline won’t defuse the debt time bomb. Doing that will require an austerity that Americans have not endured in modern times, and likely couldn’t stomach. Frankly, it means weaning the citizenry from the federal teat." (emphasis added)

~ Nolan Finley

Source: his April 22, 2017 column, "Debt is Real Trump Budget Cruelty," The Detroit News.

April 23, 2017

Arlington County Board Makes It Official - Tax Burden to Rise

The Arlington County Board made it official yesterday, and adopted a $1.25 billion Fiscal Year 2018 budget, according to the county press release, released yesterday.

The five bullet points in the press release were:

  • 1.5-cent property tax rate increase dedicated to Metro, Schools
  • Cuts made to Manager’s proposed budget
  • $7.4 million more n General Fund revenues for Metro
  • $23.3 million increase for Schools
  • Investments in Columbia Pike, Lee Highway

We growled about the Board's action to raise the real estate property by 1.5 cents on Thursday following the Board's budget work session, the so-called Chairman's mark. The Growls includes links to both Arlington Sun Gazette and Washington Post reporting.

Here's what amounts to a summary of the Board's action on Saturday, April 22, 2017:

'The Arlington County Board today adopted a $1.25 billion balanced General Fund Budget for Fiscal Year 2018 that includes a one-and-a-half-cent increase in the real estate tax rate for Calendar Year 2017.

“This budget is a compromise and a consensus of the Board, and reflects the values of this community,” said Arlington County Board Chair Jay Fisette. “The Board agreed to a modest increase in the property tax rate — less than the Manager recommended — because of the extraordinary funding needs of Metro and our public schools. Both Metro and our schools are vitally important to Arlington. We and every other jurisdiction served by Metro are having to increase our contributions as Metro continues to rebuild. And the County must help APS meet the challenge posed by its growing student population. Both investments are investments in our future.”

"County Manager Mark Schwartz had proposed a two-cent increase in the real estate tax rate to provide additional funding for Metro and Arlington Public Schools. The Board chose to make cuts and reallocations to the Manager’s proposed budget to keep the increase to one-and-a-half cents per $100 of assessed property value. This will increase the tax rate from the current $0.991 per $100 of assessed value to $1.006 per $100 of assessed value (including stormwate tax)."

In his comments following adoption of the FY 2018 budget, John Vihstadt talked about his successful motion that directed the Manager to suggest options that would "dial back the advertised 2 cents property tax hike to a penny." He pointed out that some called it a 'charade' or 'posturing.' He thanked his fellow Board members, who "actually accepted a number of the reductions." As a result, he thought that dialing back the advertised property tax increase of two cents by 25% should be considered an "accomplishment."

He also pointed out that the Arlington County Civic Federation had highlighted that "with rising assessments, everyone will still face increased tax burdens higher than the inflation rate -- even before this property tax increase is included." The bottom line, Vihstadt said, is that "Arlington becomes less affordable each year," and then went on to emphasize the Board needs to "infuse a culture of economy here at 2100 Clarendon Boulevard," saying "We know how to add. Subtraction, not so much." He ended by saying, "continued scrutiny of how we approach our annual budget carryover process and our many reserves and fund balances is essential." An attitude that citizens should be looking for in each and every future County Board member, no matter their party affiliation.

The press release identified several fee increases, too, including:

  • Household solid waste fee was increased $6.88, bringing the rate to $314.16 per year.
  • Water/sewer rate was increased to $13.62 per 1,000 gallons, an annual increase of about $24.50 per household.
  • Accessory homestay permit fee of $60, a new source of revenue for the county.

As the county has emphasized numerous times over the past few months, Metro received a significant increase, specifically one cent of  the 1.5 cents tax rate increase. According to the press release, "the County's total operating support for Metro" is now $71 million.

The County continued to be enthralled by so-called affordable housing. "The Board increased funding to affordable housing over the FY 2017 budget by $1.3 million. Total AHIF funding in FY 2018 is just over $15 million." Parks advocates also benefited from Board action, e.g, $4 million for land acquisition rather than the Manager's $2 million recommendation.

While it's too late to take action on the FY 2018 budget, Growls readers who are Arlington County taxpayers are encouraged to make their concerns about spending by Arlington County and Arlington Public Schools heard by the Arlington County Board.  To contact the Board, just click-on the following link:

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

And tell them ACTA sent you.

UPDATE (4/25/17). The Washington Post's Patricia Sullivan reported on the County Board's official action raising the real estate tax rate by 1.5 cents, "all devoted to schools and Metro."

April 22, 2017

Virginia Improves Its Economic Outlook and Performance

The American Legislative Exchange Council (ALEC) published the 10th edition of Rich States, Poor States this week. Subtitled the ALEC-Laffer State Economic Competitiveness Index, it "reveals a pro-growth trend across the nation for 2017." The authors of Rich States, Poor States are Dr. Arthur Laffer, Stephen Moore, and Jonathan Williams.

Here's how ALEC introduces the index:

"Rich States, Poor States examines the latest movements in state economic growth. The data ranks the 2017 economic outlook of states using fifteen equally weighted policy variables, including various tax rates, regulatory burdens and labor policies. The ninth edition examines trends over the last few decades that have helped or hurt states’ economies.

"Used by state lawmakers across America since 2008, Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, is authored by economist Dr. Arthur B. Laffer; Stephen Moore, distinguished visiting fellow at the Heritage Foundation; and Jonathan Williams, vice president of the ALEC Center for State Fiscal Reform."

The state rankings are based on two numbers:

The first is the Economic Outlook Ranking, "a forecast based on a state’s current standing in 15 state policy variables. Each of these factors is influenced directly by state lawmakers through the legislative process. Generally speaking, states that spend less—especially on income transfer programs, and states that tax less—particularly on productive activities such as working or investing—experience higher growth rates than states that tax and spend more."

The second is the Economic Performance Ranking, "a backward-looking measure based on a state’s performance on three important variables: State Gross Domestic Product, Absolute Domestic Migration and Non-Farm Payroll Employ- ment—all of which are highly influenced by state policy. This ranking details states’ individual performances over the past 10 years based on this economic data."

Virginia's Economic Outlook ranks 11th (1=best, 50=worst), and it's Economic Performance ranked 23rd. The latter is a combination of state GDP (28th); state domestic migration (22nd); and non-farm payroll (24th). The Economic Outlook is an improvement over 2016 when it ranked 13th, but still has a ways to go since it ranked 8th in 2010.

The economic variables that helped its relatively high Economic Outlook ranking of 11th included whether Virginia levied an estate or inheritance tax; state minimum wage, Virginia's right-to-work status, and its average workers' compensation costs. On the other hand, economic variables dragging down Virginia's Economic Outlook include top marginal corporate income tax rate; property tax burden; recently legislated tax changes; and, number of tax expenditure limits.

The complete 55-page .pdf version of the Index is available here.

HT Clark Packard for bringing the new "Rich States, Poor States" to our attention at the National Taxpayers Union (NTU) blog. His post included:

". . . The study confirms what many know to be true – states that tax and spend less outperform high spending and high taxing states.

"Over the last couple years, for instance, North Carolina has dramatically improved its economic outlook – from 26th in 2011 to 3rd for 2017 – by passing comprehensive tax reform that lowered rates and helped rein in state spending."

ALEC included the following quote about the report by U.S. Senator Tim Scott (R-South Carolina):

"As the national economy continues to remain far below trend, ALEC’s measures of state economic policies and how these policies contribute to state-level economic performance are more important than ever for understanding economic growth and opportunities. This publication provides fundamental knowledge for evaluating the policies that enhance economic growth, and those that lead to economic stagnation. It is a must-read for policymakers and anyone interested in how our states can grow and provide their residents more opportunities to succeed."

Growls readers who are not satisfied with the "state of the Commonwealth" should take a few minutes to review the entire Rich States, Poor States report for Virginia, and then write to Governor McAuliffe. Click-on the following link:

Growls readers who are concerned that Virginia legislators are not making the right economic policy decisions should write to their state legislators. The following legislators represent Arlington County in the Virginia General Assembly: Senators (Adam Ebbin, Barbara Favola, or Janet Howell) and Delegates (Rip Sullivan, Patrick Hope, Alfonso Lopez, or Mark Levine). Contact information for members of the General Assembly can be found here  -- use one of the "quick links" to locate the senator and delegate who represent you.

And tell them ACTA sent you.

April 21, 2017

The Federal Income Tax -- Then (1913) and Now (2017)

With the 2017 tax filing season over for most Americans, Growls readers might find of interest a short 104-year history of the income tax that Americans for Tax Reform (ATR) posted last week.

ATR makes the following points:

  • In 1913 the top marginal income tax bracket was 7% -- today it is 39.6%.
  • In 1913 the marginal income tax bracket range was 1% - 7%. Today the range is 10% - 39.6%.
  • In 1913 there were 400 pages in the tax code. Today there are 74,608 pages in the code.
  • In 1913 the family standard deduction was $98,425.45 in today’s dollars. The family standard deduction now is just $12,600.
  • When the income tax started in 1913, only 358,000 Americans had to file a 1040. Today 148,606,578 Americans file 1040s.

As Grover Norquist, president of Americans for Tax Reform, said, "The American income  tax is perhaps the most dramatic example of how government grows at the expense of liberty.

The following chart from ATR shows the perniciousness of the income tax:

 

Burt Fulson, professor of history at Hillsdale College has an essay posted at the Foundation for Economic Education (FEE) website. It is entitled, "The Progressive Income Tax in U.S. History," and includes:

"During the 1800s economic thinking in the United States usually conformed to the founders’ guiding principles of uniformity and equal protection. One exception was during the Civil War, when a progressive income tax was first enacted. Interestingly, the tax had a maximum rate of 10 percent, and it was repealed in 1872. As Representative Justin Morrill of Vermont observed, “in this country we neither create nor tolerate any distinction of rank, race, or color, and should not tolerate anything else than entire equality in our taxes.”

"When Congress passed another income tax in 1894—one that only hit the top 2 percent of wealth holders—the Supreme Court declared it unconstitutional. Stephen Field, a veteran of 30 years on the Court, was outraged that Congress would pass a bill to tax a small voting bloc and exempt the larger group of voters. At age 77, Field not only repudiated Congress’s actions, he also penned a prophecy. A small progressive tax, he predicted, “will be but the stepping stone to others, larger and more sweeping, till our political contests will become a war of the poor against the rich.”

"In 1913, almost 20 years later, the ideas of uniform taxation and equal protection of the law for all citizens were overturned when a constitutional amendment permitting a progressive income tax was ratified. Congress first set the top rate at a mere 7 percent—and married couples were only taxed on income over $4,000 (equivalent to $80,000 today). During the tax debate, William Shelton, a Georgian, supported the income tax “because none of us here have $4,000 incomes, and somebody else will have to pay the tax.” As Madison and Field had feared, the seeds of class warfare were sown in the strategy of different rates for different incomes."

Growls readers are urged to make their views about the federal income tax known to their members of Congress. 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.

April 20, 2017

Arlington Cunty Government 1.5 Cents; Taxpayers 0.5 Cents

On February 25, we growled when the Arlington County Board "voted 3-2 to advertise a property tax rate for Calendar Year (CY) 2017 of $0.998 per $100 assessed value, not including the $0.013 stormwater rate. The advertised rate is two cents higher than the current property tax rate."

At their final budget work session today, the so-called mark-up session, County Board members settled on a 1.5 cent increase in the real estate tax rate, according to Scott McCaffrey of the Arlington Sun Gazette this afternoon.

In his reporting, McCaffrey wrote:

"County Board members on Thursday signaled they planned to increase the real-estate tax rate from 99.1 cents per $100 assessed value to $1.006 per $100, a move that will allow the government to fully fund the school system’s budget request, provide healthy employee raises and support initiatives ranging from land acquisition to services for immigrants faced with deportation.

"The package set for final approval over the weekend represents “as much of a consensus budget as we can [get],” said County Board Chairman Jay Fisette, who is wrapping his 20th and final budget season since being elected in 1997.

"The spending plan, Fisette said, is “a budget that accomplishes many of the goals we have.”

"Board members spent part of Thursday huddled with staff, working through last-minute issues, including back-and-forth over whether a specific pot of funding should be devoted to schools or to affordable housing.

"Having worked through issues in dispute as best they could, “nothing is intended to change between today and Saturday,” Fisette said.

For Arlington homeowners, there will be a double whammy of the higher tax rate and higher average assessments. For the owner of a property assessed last year at $700,000 whose assessment rose the countywide average of 2.9 percent, 2017’s real-estate tax bill of $7,246 will be up from $6,937 a year ago.

"But it could have gone higher: Earlier in the budget season, County Board members had advertised a two-cent increase in the tax rate. That set the maximum increase the board could impose, although board members could – and apparently will – vote for a rate lower than that cap.

"While lower than the advertised rate, the increase rebuffs the recommendation of the Arlington County Civic Federation, whose members in a lopsided vote during budget season called for no change to the existing rate. Civic Federation delegates said the county government would be able to fund all of the requests of Schwartz by using funds left over from previous years."

Read the remainder of McCaffrey's report here.

It's disappointing that the Board finds it easier to add to the taxpayers' burden instead of doing the hard work of making local government more efficient, effective and economical. Rather, they seem to find it easier to raise taxes to fund ever larger government. Or worse, benefiting from the windfalls that result from increases in real estate assessments. But doing the right thing would mean setting priorities, setting performance standards, identifying inefficiencies, and holding the Board and the Manager accountable.

For example, a search of Fairfax County's employee handbook identified an employee suggestion program. Unfortunately, a similar search at Arlington County's website found no such program that would enable county employees to suggest more efficient and economical ways of working.

Furthermore, Arlington County taxpayers, as well as taxpayers of other Northern Virginia jurisdiction, need a tool that compares costs and other performance measures of Northern Virginia jurisdictions. This tool would be similar to the Guide produced by the Washington Area Boards of Education (WABE). Or, something like the Arlington Public Schools' "APS Dashboard," which makes performance and business operations data transparent.

Nevertheless, Board member John Vihstadt deserves kudos for pushing to have the Manager provide a list of budget reduction options equivalent to a one-cent tax rate increase. It was also his recommendation that the Manager complete a reserves analysis when the Board adopted the FY 2017 budget a year ago. The analysis was originally due October 1, 2016, but unfortunately, the deadline was continually slipped until the Manager presented the analysis during the Board's April 18 budget work session. If the analysis had been completed timely, it's entirely possible the Board could have identified the funds that would have allowed the Board to settle on a much lower tax hike than 1.5 cents. But credit is also due to the entire Board since it took various combinations to pass some of those budget reduction options.

Kudos, too, to the Arlington County Civic Federation's Revenues & Expenditures Committee for their help in pushing the Board to look to using its reserves to pay for some or all of needed additional tax revenues. We'll  growl about the April 18 budget work session in a future post.

UPDATE (4/22/17). Scott McCaffrey updated his Arlington Sun Gazette story from Thursday with "additional comments  from community leaders," and is kind enough to include comments from Thursday's Growls.

UPDATE (4/22/17). In his Editor's Blog on Friday, McCaffrey reminds readers of lines from the Beattles' George Harrison, writing:

"Among the lyrics: “If you drive a car, I’ll tax the street/ If you try to sit, I’ll tax your seat/ If you get too cold I’ll tax the heat/ If you take a walk, I’ll tax your feet.”

"The Arlington County Board yesterday itself reached a little deeper into the pockets of county property owners, deciding to boost the tax rate 1.5 cents from the current 99.1 cents per $100.

"As for where all that extra cash will be going, the late Mr. Harrison put it best in discussing government spending: “Don’t ask me what I want it for/ If you don’t want to pay some more.”

Makes you wonder which Arlington County Board members have "Tax Man" on their mobile device's Playlist.

UPDATE (4/22/17): Patricia Sullivan posted a report Thursday evening for the Washington Post about the decisions the Arlington County Board made at its budget work session Thursday. In her lede, Sullivan wrote, "Facing rising costs from Metro and higher school enrollment, the Arlington County Board is poised to pass a 1.5 cent increase in the property tax rate, one-half cent less than what the county manager proposed and the board advertised earlier this year."

April 19, 2017

Cost Increases Halt Next Round of NCAC Projects

At ARLnow.com yesterday, Chris Teale reported,"No new projects to improve pedestrian safety — such as sidewalk fixes or streetlight installations — will be approved until at least December after a vote last week by a citizen committee."

He continued, writing:

"The Neighborhood Conservation Advisory Committee voted April 13 to suspend its spring funding round due to “anticipated increases in construction costs for projects that have already been approved by the County Board,” neighborhood conservation program coordinator Tim McIntosh said in an email.

"NCAC represents 48 of the county’s 57 civic associations and leads the development of neighborhood plans. It also recommends neighborhood-initiated improvements for county funding, like sidewalks, street beautification, pedestrian safety projects, street lights and parks.

"The NCAC’s decision does not affect existing projects already approved by the County Board. McIntosh said design work and construction on several plans will continue this year, but that the committee “wanted to reserve a portion of its 2016 bond to cover any cost overruns which may occur later this year for projects going out for competitive bid.”

"The focus will be on continuing design work for approved projects and making sure sufficient funding is on hand to complete them prior to approving new ones,” McIntosh said.

In an email, an anonymous tipster was critical of the NCAC approvals process and said more must be done to help improve pedestrian safety."

Teale also reported that "McIntosh said no decision has been made about the fall round of funding, set to be voted on in December."

Arlington County's has much more information about the neighborhood conservation program, including NC plans, the NC funding process, the NC Guide, and the NC advisory committee (NCAC). You can also access a list of participating neighborhoods.

Will wonders never cease? We have been concerned with NC project cost overruns. However, NCAC delegates are due kudos for taking action to defer funding action for six months. And hopefully, this action will be a wake-up call for county staff and the Arlington County Board to get their arms around NC costs.

Growls readers are encouraged to voice their concerns about the Neighborhood Conservation program known to members of the Arlington County Board.  To contact the Board, just click-on the following link:

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

And tell them ACTA sent you.

April 18, 2017

Complexity is Root of All Evil , At Least in Tax Code

Nina Olson, National Taxpayer Advocate, has an op-ed in the Wall Street Journal today (behind WSJ paywall). She argues that "as Congress takes up reform, it should consider radically simplifying the rules for individuals."

She opens the op-ed, writing:

"As the national taxpayer advocate, I oversee an independent unit within the Internal Revenue Service that has helped more than four million individual and business taxpayers resolve their IRS account problems, and I am required to report to Congress annually on the most serious problems encountered by U.S. taxpayers.

"If I had to distill everything I’ve learned into one sentence, it would be this: The root of all evil is the complexity of the tax code. (emphasis added)

"There is currently considerable support in Congress to take up corporate tax reform, and corporate reform is certainly needed. But I urge policy makers to remember that, as compared with about two million taxable corporations, there are 151 million individual taxpayers, including 27 million who report sole-proprietor or farm business income with their individual returns. There are also nearly nine million pass-through entities (S corporations and partnerships), the income from which is reported on individual income-tax returns. These taxpayers desperately need relief from the extraordinary compliance burdens the tax code imposes.

"I have long believed comprehensive tax simplification is achievable by following the model of the landmark Tax Reform Act of 1986 . . . ."

She also makes six core principles, starting by not making the tax code so complex that it creates traps for the unwary, or simple enough so that "most taxpayers can prepare their own returns . . . on a single form."

Olson concludes with the following advice:

"Streamline the penalty regime. In 1955, there were 14 civil penalties in the tax code. Today, there are more than 170, many of which are rarely assessed.

"U.S. taxpayers have been struggling under the weight of the current tax code for far too long. The Bush and Obama administrations both produced reports with many good simplification proposals, as have the House Ways and Means and Senate Finance committees and others. There is no shortage of good ideas. Now is the time for the administration and Congress to seize the moment and finally, this year, carry tax reform across the goal line."

Last Friday, we growled about the tax burden that results from tax complexity, citing the 2017 report of National Taxpayers Union Foundation (NTUF).

You can access the Internal Revenue Service's Taxpayer Advocacy Service (TAS) by clicking here. In addition, four separate reports are archived:

  • Objectives Reports, which contains TAS's goals and activities.
  • Annual Reports to Congress.
  • Annual Report to Congress Report Cards, which provides IRS's response to each recommendation.
  • Congressional District Statistics.

While the burden of preparing your tax return is still fresh in your mind, Growls readers are urged to take a few minutes to tell your representatives in Congress that tax reform needs a hefty dose of tax simplification. 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.

April 17, 2017

A Thought about Economic Inequality

"More and more, our political system treats economically successful Americans as resources for 'society’s' desires rather than as sovereign individuals with an inalienable right to their own pursuit of happiness. Witness, for example, the plans Democratic candidates have for this country. Free health care—paid for by 'the rich.' Free college—paid for by 'the rich.' Larger Social Security payments—paid for by 'the rich.'"

~ Don Watkins

Source: his April 14, 2017 article, "Economic Inequality Complaints are Just a Cover for Anti-Rich Prejudice," TheFederalist.com.

                                           - - - - - - - - - - - - - - - - - - - - - - - - - - -

Don Watkins is a fellow at the Ayn Rand Institute and coauthor with Yaron Brook of "Equal Is Unfair: America's Misguided Fight Against Income Inequality."

April 16, 2017

Feds Collect Record Taxes, Still Run $526 Billion Deficit

At CNS News on Friday, Terence Jeffrey wrote, "The federal government collected record amounts of both individual income taxes and payroll taxes through the first six months of fiscal 2017 (Oct. 1, 2016 through the end of March), according to the Monthly Treasury Statement."

He went on to explain, writing:

"Through March, the federal government collected approximately $695,391,000,000 in individual income taxes. That is about $7,387,280,000 more than the $688,003,720,000 in individual income taxes (in constant 2017 dollars) that the federal government collected in the first six months of fiscal 2016.

"The federal government also collected $547,491,000,000 in Social Security and other payroll taxes during the first six months of fiscal 2017. That is about $2,731,820,000 more than the $544,491,000,000 in Social Security and other payroll taxes (in constant 2017 dollars) that the government collected in the first six months of fiscal 2016.

"Despite collecting record amounts of individual income taxes and payroll taxes, the Treasury still ran a deficit of $526,855,000,000 in the first six months of fiscal 2017.

"Also, even with record revenues from individual income taxes and payroll taxes in the first six months of fiscal 2017, overall federal tax collections were slightly down."

Here's the bottom line he presents:

"The federal government ran its $526,855,000,000 deficit through the first six months of this fiscal year because while the Treasury was collecting $1,473,137,000,000 in total taxes, it was spending $1,999,991,000,000.

"Because there were 153,000,000 people employed in the United States in March, according to the Bureau of Labor Statistics, the $1,473,137,000,000 in taxes the federal government has collected so far this fiscal year equals about $9,628 for every person with a job."

Jeffrey concludes by point out, "The $526,855,000,000 deficit dquals about $3,443 for every person with a job."

He links to Treasury's monthly report, and provides several charts, including the one below:

  

That sure is something to think about as Congress returns to Washington in a week to take up the debt limit and tax reform. If the deficit and the national debt concern you, Growls readers are urged to take a few minutes to contact your member of Congress. 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.

April 15, 2017

A Thought about Federal Spending

"If we believe that the federal government should be involved in funding after-school and summer programs for local communities, then there is no party in Washington that believes anything should be outside the scope of the federal government. It’s that simple. It’s simply indefensible for cradle-to-grave-socialism on such a local level to be funded by the federal government, yet the federal government funds just that through the 21st Century Community Learning Centers (21st CCLC) to the tune of $1.67 billion a year. Now, a group of 81 Republicans and Democrats, pressured by teacher’s unions and rent seekers who stand to benefit from “free funding,” are demanding that the Trump administration take this program off its list of cuts."

~ Daniel Horowitz

Source: his April 14, 2017 column, "We'll Never Put a Dent in Federal Spending When so Many RINOs Want to Keep After-School Welfare Programs," Conservative Review.

April 14, 2017

Federal Tax Complexity 2017: The Burden Growls . . . .

On the eve of April 18 when federal tax returns are due, the National Taxpayers Union (NTU) released NTUF Policy Paper #178 on  tax complexity 2017 this week, which concludes that "as the burden grows, taxpayers' patience shrinks."

They write in the introduction:

"Perhaps as a symptom of how unwieldy the tax system has become, one of the nation’s largest tax preparer firms has teamed up with IBM’s Watson to assist filers this year. Perhaps it’s fitting that an artificial intelligence technology be enlisted to help citizens understand the tax laws, since they seem to be beyond the comprehension of the human mind. Regrettably, this is the current state of affairs, but ideally taxpayers should not have to consult a supercomputer to properly fill out their taxes!"

The paper by Demian Brady, NTU's director of research, includes numerous helpful tables and charts. For example, the first table shows the number of 1040 returns and the number of compliance hours. In 2016, the Internal Revenue Service received 148.9 million 1040 returns. Of that total, 79% were 1040's, 19% were 1040a, and 12% were 1040EZ. A total of 1.868 billion hours were needed to comply with the tax code -- an average of 15 hours for the 1040, 8 hours for the 1040a, and 5 hours for the 1040EZ.

To demonstrate how tax complexity has increased over the years, Brady uses basic data about the 1040 return. For example, in 1935, the 1040 return requested just 34 items, or lines, of information, increasing to 67 lines in 1975, 70 in 2000, and its current 79 in 2016.

The number of pages in the Form 1040 Instruction Booklet has grown even more exponentially. In 1935, the instruction booklet was just two pages. By 1975, it had grown to 39 pages. and then to 117 pages in 2000. In 2016, it was a weighty 241 pages.

Another measure of complexity is the average fee charged by the H&R Block tax service. In 1980, the average fee was $27.36, growing to $233.27 in 2016.

Here is the conclusion of the policy paper:

"In 2015, Congress enacted a Taxpayer Bill of Rights that included the right to quality service, the right to pay the correct amount of tax, the right to appeal decisions of the IRS, and the right to a fair and just tax system.[53] Yet, our system continues to fail taxpayers: the tax enforcement agency proves increasingly deficient in administering the Code and responding adequately to taxpayer needs, while filers find it increasingly necessary to seek professional assistance with their forms.

"The IRS does seek to improve taxpayer services through a proposed “Future States” initiative. This set of policies would shift taxpayer interactions with the IRS from person-to-person assistance in order to maximize online interactions. The Taxpayer Advocate continues to list this proposal as a serious risk because the constrained communications could diminish services and increase compliance burdens on taxpayers.

"Ultimately, lasting and meaningful change to alleviate the difficulties faced by so many taxpayers struggling to comply with the current Tax Code must come from lawmakers. Under the current tax system, efforts to enhance and improve taxpayer services would require a significant expenditure of limited resources into an agency that too many people distrust, thus limiting the potential benefits. That same agency would still face the task of attempting to ensure compliance with tax laws that no one inside or outside of government can completely, confidently explain or understand. A more efficient, effective policy solution would be to enact comprehensive reform of the entire system. Otherwise the toll of tax complexity will continue to rise for our economy and our society."

The .pdf version of the report is 15 pages.

With Congress set to take up tax reform later this year, now is the for for Growls readers to make their views about tax complexity known to your representatives in Congress. 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.

April 13, 2017

A Thought about Democrcy

"[D]emocracy will soon degenerate into an anarchy, such an anarchy that every man will do what is right in his own eyes and no man's life or property or reputation or liberty will be secure, and every one of these will soon mould itself into a system of subordination of all the moral virtues and intellectual abilities, all the powers of wealth, beauty, wit and science, to the wanton pleasures, the capricious will, and the execrable cruelty of one or a very few."

~ John Adams, An Essay on Man's Lust for Power, 1763

Source: Founders' Quote Database, The Patriots Post.

April 12, 2017

Manipulating Food Stamp Error Rate Costs Virginia $7.1 Million

According to the Richmond Times-Dispatch's Michael Martz on Monday, "Virginia has agreed to repay the federal government $7.1 million for manipulating error rates in determining eligibility for food stamps under the SNAP program."

Martz continued, writing:

"The U.S. Department of Justice announced the settlement Monday of an investigation into allegedly improper methods used by the Virginia Department of Social Services and a private consultant to reduce error rates in the program early in the term of then-Gov. Bob McDonnell.

“SNAP is an important vehicle for helping needy families,” said Chad A. Readler, the acting assistant attorney general in the Justice Department’s Civil Division.

“This settlement reflects the Justice Department’s commitment to ensuring that taxpayer funds are spent appropriately so that the public can have confidence in the integrity of vital programs like SNAP.”

"Virginia Secretary of Health and Human Resources Bill Hazel, who held the same job under McDonnell, said the state had hired a consultant then to find ways to reduce the number of errors it was making in eligibility determinations for the federal program, which the state helps to administer for the U.S. Department of Agriculture."

He later added:

"The Justice Department investigation — part of a nationwide audit of quality control in the SNAP program — said Virginia had hired Julie Osnes Consulting, a quality-control company based in South Dakota, in 2010 to reduce the error rate in determining whether someone is eligible for SNAP benefits.

"The state Social Services Department acknowledged to investigators that the consultant trained state workers “to ‘use whatever means necessary’ to find a benefits decision ‘correct’ rather than finding an error,” the Justice Department said.

"Virginia social services officials also acknowledged to investigators that if they were unable to find a case determination to be correct, “they were instructed to ‘find a reason to drop the case,’ or eliminate it from the sample,” the Justice Department said.

"The Justice Department said that beginning in 2015, the state had “taken certain corrective actions, including terminating its use of the improper quality control methods devised by Julie Osnes Consulting.” Hazel said the state terminated its contract with the consultant in 2012."

Growls readers who are concerned abut the manipulation of the food stamp error rates are urged to write to Governor Terry McAuliffe. Just click-on the following link:

Growls readers are also urged to write to their state legislators. The following legislators represent Arlington County in the Virginia General Assembly: Senators (Adam Ebbin, Barbara Favola, or Janet Howell) and Delegates (Rip Sullivan, Patrick Hope, Alfonso Lopez, or Mark Levine). Contact information for members of the General Assembly can be found here  -- use one of the "quick links" to locate the senator and delegate who represent you.

And tell them ACTA sent you.

April 11, 2017

A Thought about Prudence and Change

"The Conservative believes, as Burke and the Founders did, that prudence must be exercised in assessing change. Prudence is the highest virtue for it is judgement drawn on wisdom. The proposed change should be informed by the experience, knowledge, and traditions of society, tailored for a specific purpose, and accomplished through a constitutional construct that ensures thoughtful deliberation by the community. Change unconstrained by prudence produces unpredictable consequences, threatening ordered liberty with chaos and ultimately despotism, and placing at risk the very principles the Conservative holds dear." (Italics in the original)

~ Mark R. Levin

Source: page 14, in his book, Liberty and Tyranny: A Conservative Manifesto.

April 10, 2017

Do Long-term School Enrollment Projections Have Value?

According to Scott McCaffrey of the Arlington Sun Gazette today, "A consultant has thrown cold water on suggestions that the Arlington school system try to provide enrollment projections beyond a decade-long window."

McCaffrey writes:

“I just don’t think it would be worth the time and effort . . . there’s too many variables,” Richard Grip of Statistical Forecasting told School Board members on April 6, suggesting that a 10-year time frame was about the longest that would make much sense.

“If we’re looking out 25, 30 years, those kids haven’t been born yet,” said Grip, who has been reviewing Arlington Public Schools’ forecasting efforts for a year. “Fertility rates change over time, the number of women that come in of child-bearing age changes. You can’t forecast housing growth or housing conversions that far out.”

"After years of a relatively stable student population, Arlington has seen a boom in recent years, largely from single-family neighborhoods. The current enrollment of 26,000 is expected to top 30,000 by 2021 and, while estimates have varied, the potential of eventually hitting 40,000 has not been discounted.

"School Board member Reid Goldstein said Grip had presented a “comprehensive and fascinating” report, but wondered why recent projections of enrollment trends at individual schools had been more significantly off.

"Grip responded with a common-sense answer: Because individual schools have smaller populations than the district as a whole, smaller changes have a bigger impact."

McCaffrey ended his report by noting, "Unless it's a case of sheer luck, 'there's not ever a chance you're going to get this on the money,' (Grip) said.'"

It would be interesting to know the amount that Arlington County taxpayers paid a consultant to learn that projections are never perfect. An even better question is why it was necessary to hire a consultant to tell School Board members what competent staff should be able to explain to School Board members if they were business school graduates.

Growls readers with questions or comments about school enrollment projections are urged to contact 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.

April 09, 2017

A $100 Million Upgrade to Sewage Treament Plant

According to the Arlington County website, the Arlington County Board authorized, as part of Master Plan 2001, up to $568 million for a Water Pollution Control Plant "to help protect, restore and safeguard state waters, and in 2003, they "pursued limit-of-technology standards concerning nutrient removal set by the Virginia Department of Environmental Quality (DEQ)."

The County adds, "Arlington is ranked first in the state for milligram-per-liter nitrogen discharge. And the Master Plan 2001? It was completed under budget and approximately one and a half years ahead of schedule."

Now they have a Solids Master Plan that will cost up to $100 million, but according to the Arlington Sun Gazette, Arlington officials are seeing "some pushback on solid-waste upgrade." Yesterday, Scott McCaffrey wrote:

"Take all the stuff flushed through Arlington’s wastewater system in a given day, squeeze out all the liquid, and what do you have?

"All told, nearly 260,000 pounds of leftover solid material – all of which currently is treated with lime and trucked out of the area for disposal.

"Arlington officials aim to cut that amount by more than half through a nearly $100 million upgrade to the Water Pollution Control Plant. But one aspect of the proposal has some in the community worried.

"Under what has emerged as the likely staff recommendation, focused on a process called “anaerobic digestion,” the amount of residual solid material would be cut to approximately 115,000 pounds per day. But one result of switching to the new process – the creation of methane biogas as a byproduct – has engendered some community angst.

“People are concerned about the impact,” said Suzanne Sundburg, a delegate to the Arlington County Civic Federation. By flaring off excess build-ups of gas, “you’re shooting superheated gas up into the atmosphere,” she said.

"David Hughes, another Civic Federation delegate, pressed the county government to “ensure that there won’t be a problem for the immediate neighborhood or the community at large.”

"Dispatched to the Civic Federation in an effort to provide reassurance was Mary Strawn, an engineer with the government’s Department of Environmental Services.

"Strawn, who spoke at the federation’s April 4 meeting, predicted that the planned upgrades would, on balance, be a net positive for the community and the environment.

“We think it’s well worth the investment,” she said."

McCaffrey also wrote:

"County officials earlier had budgeted $150 million for the current round of upgrades; the preferred alternative clocks in at $94 million, Strawn said. Users of the county government’s water and sewer services will pay the tab.

"While the Water Pollution Control Plant recently underwent a major renovation clocking in at more than $560 million, the focus was on the liquid side of the equation. Now, the effort has turned to the solid side, where some upgrades already have been undertaken to deal with aging infrastructure."

More information about the Water Pollution Control Plant's Solids Master Plan can be found here.  At the webpage, information materials can be found going back to the plan's initial introduction on December 15, 2015 as well as meeting notes, meeting Q&A, a comparison of life cycle costs, and a fact sheet of the solids master plan.

One question that I was not able to answer in looking through the Solids Master Plan information is why an upgrade to the plant is needed if Arlington is already ranked first in the state in "per-liter of nitrogen discharge."

If Growls readers wish more information on the upgrade to the sewage treatment plant, they may wish to contact  the Arlington County Board.  Just click-on the following link:

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

And tell them ACTA sent you.

April 07, 2017

Arlington School Board Approves Budget With $14 Million Gap

At ARLnow.com today, Chris Teale reports that "Arlington Public Schools’ preliminary FY 2018 budget has an $11 million gap in funding after the School Board approved its proposal last night."

Teale continues:

"The budget now stands at just over $614 million, down from Superintendent Patrick Murphy’s initial plan of $617 million.

"County Manager Mark Schwartz’s proposed additional real estate tax hike, in part to help fund schools, would likely make up the shortfall in county funding. The state has also kicked in an additional $78,000 to help with construction projects.

“What we’ve done with our budget is taken it to the point where it fits with what the county manager has proposed to the County Board,” said School Board vice chair Barbara Kanninen. “We’re looking at the county manager’s proposal as his sincerest effort to do what’s needed at the county level. We hope the County Board sees it that way.”

"During Thursday’s meeting, members found savings by again tweaking the budget plan. Savings include $1.8 million on technology, adding a transportation planner and removing a School Board staff member. Various other job cuts would only take effect if the County Board does not provide the extra money.

"Board members emphasized that the savings on technology do not relate to the controversial one-to-one policy of giving each elementary student an iPad. Leslie Peterson, assistant superintendent for finance and management services, said that instead the savings have come through looking at the school system’s procurement of contracts.

"School Board member Reid Goldstein said staff and elected officials have worked tirelessly to bring the funding deficit down from more than $20 million. He said that even with the efficiencies found, the budget plan balances educating students with fiscal responsibility."

Teale also reported that "School Board members presented the budget plan to the County Board earlier today;" the story includes a number of embedded links that readers might want to follow. At the moment, there are 41 reader comments.

In his Right Note column yesterday, Mark Kelly offered two controversial ideas for the APS budget, one of which was to scrap the so-called Revenue Sharing Agreement (RSA). Because of the RSA, the Schools receive "an arbitrary 46.5 percent" of county tax revenues. According to Kelly:

"So instead of writing a school budget to an arbitrary 46.5 percent share of revenue, APS should write a budget based on demonstrable needs.

"This approach could result in the school receiving a larger share out of the annual budget in some years. It might mean they no longer automatically receive a share of closeout funds, which would take away an administration slush fund.

"This line of thinking would certainly require a closer relationship between the County Board and the School Board. It also would shine a brighter light on the APS budget, by requiring another layer of accountability for its spending."

When the Superintendent presented his proposed FY 2018 budget in February, it included a budget gap of $14 million ($603 million of revenue and $617 million of expenditures). However, he proposed only $12.2 million of reductions, "tiered" at that. If the County and Schools are going to have a RSA, shouldn't the Schools be required to live up to it? Budget documents are available at the Schools FY 2018 budget development page.

If the County was to provide the School Board with the full $14 million, that would equate to about a two-cent increase just for the Schools. But, remember, when the County Board voted to advertise a 2-cent increase in the real estate tax rate, the thinking was that 1-cent would go to WMATA and the second 1-cent was for the Schools.

The only document available for this morning's meeting of the County and Schools Boards is this PPT presentation. The presentation points out the "County provides other services to the Schools costing in excess of $7 million each year." This includes school resource officers, school health nurses, clinic aides and crossing guards. The County presentation also points out, "As APS enrollment grows, so does the demand for DHS services," e.g., for every 1,000 APS students, 87 children receive monthly WIC services.

One final point from the County's PPT presentation is worth noting. Since FY 2013, the School Transfer has increased 21.3% while the County General Fund has only increased 16.2%. That brings us to the second "controversial idea" in Mark Kelly's Right Note column yesterday:

"Arlington’s enrollment is increasing. However, the growth has slowed down over the projections from a couple years ago. As Arlington works to deal with the uncertainty in increasing enrollment to determine the construction of new buildings, the community should give school administrators some room to make commonsense decisions in the short run.

"Superintendent Patrick Murphy included increasing the ratios by one student per classroom as a way to find budget savings in this year’s budget proposal. Based on how the community has reacted in the past, the idea will almost certainly be shot down again.

"This issue simply causes reflexive reactions from people who have been conditioned to think that any increase in ratios will have a devastating impact on educational outcomes. However, academic studies have not always backed up this view."

Growls Readers: In case you didn't speak at last week's budget and tax hearings, it's not too late to make your opinion about the FY 2018 budget known to the Arlington County Board. So make your voices heard:

  • Second, you can contact the Arlington County Board with any relevant comments or questions about the County Manager's proposed FY 2018 budget. Just click-on the following link to send the Board a message:
- Write or call the Arlington County Board via e-mail, or
  • Third, call the County Board office at (703) 228-3130.

And tell them ACTA sent you.

April 06, 2017

A Thought About Taxation

“There is only one way to kill capitalism — by taxes, taxes, and more taxes.”

~ Karl Marx

Source: page 113, "As Certain as Death: Quotations About Taxes," 2010, compiled by Jeffrey L. Yablon, TaxAnalysts.com.

Note: This quote was previously used in our May 11, 2015 Growls.

April 05, 2017

Federation to Arlington County Board: Hold Line on Tax Rate

At the Arlington Sun Gazette today, Scott McCaffrey reported, "Delegates to the Arlington County Civic Federation voted overwhelmingly on April 4 in calling on the County Board to enact no increase to the real estate tax rate for 2017."

McCaffrey then continued:

"Boosters of the proposal said the county government has enough funds sloshing around from surpluses in previous years to support County Manager Mark Schwartz’s entire budget request without resorting to the manager’s proposed 2-cent increase in the tax rate.

"Dipping into excess leftover funds would  fund Schwartz’s request in full, give the taxpayers a break and wouldn’t place the long-term health of the county government at risk, said Burton Bostwick, a member of the federation’s revenues and expenditures committee.

"The county has reserves on reserves, contingencies on contingencies,” said Bostwick, who presented the committee’s recommendation to the entire membership. It passed, 30-9, with six abstentions.

"To fund the billion-dollar county budget, Schwartz proposed raising the tax rate from  99.1 cents per $100 assessed valuation to $1.011 cents, with the extra two pennies on the tax rate going to support a growing school system and needs of the Washington Metropolitan Area Transit Authority.

"Each penny added to the tax rate results in a higher tax burden of $7 million for county property owners.

“The county could easily fund the $14 million for Metro and schools out of existing funds,” Bostwick said.

"Why, then, would county staff propose a higher tax rate rather than be more creative? “They probably aren’t trying hard enough,” Bostwick said.

"Not everyone within the Civic Federation embraced the idea of no increase in the tax rate. Sarah McKinley, a delegate from Columbia Heights, said it was “unrealistic” to take that route."

Another delegate was concerned "about the potential impact of federal budget cuts." But, McCaffrey notes, "Suzanne Sundburg, a Civic Federation fiscal hawk, countered that even during the economic meltdown nearly a decade ago, the county government still ended its fiscal years with budget surpluses, so there was little to fear."

A copy of the resolution can be found at the Civic Federation's Revenues & Expenditures webpage.

Growls Readers: If you didn't get a chance to speak at last week's budget and tax hearings, it is not too late for Growls readers to comment on the FY 2018 budget. Arlington residents have three options of making their voices heard:

  • Second, you can contact the Arlington County Board with any relevant comments or questions about the County Manager's proposed FY 2018 budget. Just click-on the following link to send the Board a message:

- Write or call the Arlington County Board via e-mail, or

  • Third, call the County Board office at (703) 228-3130.

And tell them ACTA sent you.

April 04, 2017

A Thought about Taxation

"The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation."

~ Vladimir I. Lenin

Source: page 113, "As Certain as Death: Quotations about Taxes," 2010 Edition, compiled by Jeffrey Yablon, TaxAnalysts.com.

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bourgeoisie. noun, "(in Marxist theory) the class that, in contrast to the proletariat or wage-earning class, is primarily concerned with property values." (www.dictionary.com).

April 03, 2017

Arlington School Board Set to Make FY 2018 Budget Its Own

 The Arlington Sun Gazette's Scott McCaffrey reported earlier today that "Arlington School Board members on April 6 are expected to adopt a proposed fiscal 2018 budget of just over $616 million – a spending plan that asks the County Board to fill in a budget gap of just under $13 million."

McCaffrey continues:

"The package that heads to preliminary approval on Thursday is slightly less than the budget request sought by Superintendent Patrick Murphy in February, but would still be a record-breaker.

"School officials aim to save just under $1 million because of a decrease in students in the special-education and English-as-a-Second-Language populations. Officials also anticipate slightly higher state revenue than had been projected when Murphy submitted his budget plan."

And then adds:

"While County Board members are all but assured of providing most if not all the funding needed to meet that gap, School Board members also will consider additional potential cuts, including increasing class sizes and postponing implementation of pay raises by six months while eliminating about 60 staff positions."

The exact amount appropriated to the Arlington Public Schools will be known April 22 when the Arlington County Board adopts the FY 2018 budget and sets the real estate tax rates. McCaffrey also pointed out the Superintendent's "budget proposal anticipated a per-student cost of $19,521, up 2.9 percent from the current year, likely retaining Arlington’s ranking as the biggest spender, on a per-student basis, in the Washington suburbs."

If you didn't get a chance to speak at last week's budget and tax hearings, it is not too late for Growls readers to comment on the FY 2018 budget. Arlington residents have three choices:

  • Second, you can contact the Arlington County Board with any relevant comments or questions about the County Manager's proposed FY 2018 budget. Just click-on the following link to send the Board a message:
- Write or call the Arlington County Board via e-mail, or
  • Third, call the County Board office at (703) 228-3130.

And tell them ACTA sent you.

April 02, 2017

A Thought About a Common Federal Income Tax Rates

"If everybody pays at a common rate, it will be harder to expand government and raise the rate, because a larger fraction of potential voters will have a stake in limiting the spending. The more progressive the tax system becomes and the more concentrated among the few taxes become, the easier it is to expand government at the expens of a minority paying the bulk of costs."

~ Michael J. Boskin

Source: page 142, "As Certain as Death: Quotations about Taxes," 2010 Edition, compiled by Jeffrey Yablon, TaxAnalysts.com.
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Michael J. Boskin is a senior fellow at the Hoover Institution, the T. M. Friedman Professor of Economics at Stanford University, a research associate at the National Bureau of Economic. He chaired the President's Council of Economic Advisers (CEA) from 1989 to 1993.

April 01, 2017

Taxpayer Money Just Sloshing Around at the Courthouse?

On Thursday morning, the local news website ARLnow.com published a letter to the editor by a local activist and Bluemont resident. The letter was sent to the local news site and to members of the Arlingotn County Board since the writer was unable to attend Thursday evening's tax hearing.

The letter writer, Suzanne Smith Sundburg, lays out a case of why the Arlington County Board's generally expected two-cent increase in the real estate property tax rate makes little sense. According to Sundburg:

"Given the large amount of cash on hand, as outlined below, it would seem highly likely that the manager could (with Board concurrence) cover all new proposed spending by reallocating a small portion of these funds to cover limited-duration and nonrecurring expenditures in the general fund budget rather than raising the tax rate for FY2018.

"Using cash already on hand, the manager’s proposed budget could be funded without any spending cuts or a tax-rate increase. I therefore urge the Board not to increase the tax rate and to ask the manager to identify expenditures that are appropriate for alternative cash funding and to trim any unnecessary spending, using public money efficiently and effectively to minimize the need for future tax increases (or spending cuts). Below the list of several sources of cash on hand, I have identified a few cost savings and efficiencies as well."

The remainder of the letter is devoted to the amount of cash, which the County and Schools have on hand as well as several proposals for cost savings and efficiencies. She documents her assertions with references to the county's Comprehensive Annual Financial Report (CAFR) -- which includes the county's audited financial statements -- and other county fiscal documents. For example, she notes the county has a fund balance of just over $191 million, the Schools have a $77.7 cash reserve, and there's $157 million in the Transportation Capital Fund. She also questions several of the Manager's proposed staff additions.

She also points out that in FY 2004, the pension contribution of general county employees was reduced from 5% to 4%, noting that returning the contribution back to 5% could reduce the employer/county contribution by as much as $2 million. She points to the National Association of State Retirement Administrators (NASRA), which reports the median employee contribution is 5%, and it has been climbing in recent years.

When the County Board adopted the FY 2017 budget last April, they charged the Manager to analyze the County's cash reserves (Item #22 of the Board's guidance and notes). The analysis was originally due October 1, 2016, but has been continually delayed. Next week, on Tuesday, April 11, the County Board's budget work session will include a discussion of financial policies and reserves. Budget work sessions are open to the public, and broadcast on Comcast channel 74 and Verizon FIOS channel 39. Given how much taxpayer money appears to be sloshing around the county's financial system, this may be the most important budget work session in years.

If you didn't get a chance to speak at this past week's budget and tax hearings, it is not too late for Growls readers to comment on the FY 2018 budget. Arlington residents have three choices:

  • Second, you can contact the Arlington County Board with any relevant comments or questions about the County Manager's proposed FY 2018 budget. Just click-on the following link to send the Board a message:
- Write or call the Arlington County Board via e-mail, or
  • Third, call the County Board office at (703) 228-3130.

And tell them ACTA sent you. And kudos to Ms. Suzanne Smith Sundburg for her letter to the editor.

In the interest of complete disclosure, Ms. Sundburg and I both serve on the Arlington County Civic Federation's Revenues & Expenditures Committee.