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April 18, 2019

The County Board goes all SJW

The County Board has taken a break from giving away our tax dollars to the world's richest man, the DEA, and other worthies to join the  School Board and go all SJW in some cultural vandalism.

"The County Board will hold a public hearing at its Thursday, April 25 meeting, and consider adopting a resolution asking the Commonwealth Transportation Board to rename Jefferson Davis Highway, within Arlington’s boundaries, to Richmond Highway, after violent protests by African-Americans."

Ok, I made up the part about protests. There was no public outcry.

This is Stalinesque in its revisionism, but evidently 1984 is no longer a cautionary tale, but rather an instruction manual.

Jefferson Davis was an honorable man, as was Robert E. Lee and J. E. B. Stuart. The same cannot be said of the lickspittles who run the county and its schools.

Shame on them all.

 

 

April 17, 2019

Are Economic Development Subsidies Good Public Policy?

Few questions provoke similar responses from left-leaning groups like the Center for American Progress (CAP) as well as right-leaning ones like the Mercatus Center at George Mason University.

From CAP:

Economic development incentive deals frequently occur under the radar…. [F]ar too often, economic development incentives are irrelevant to [the receiving entity’s] decision-making, fail to meet promised results, take away from existing or potential public services, lead to zero-sum competition among governments, and lack appropriate oversight. The Realities of Economic Development Subsidies," 11-1-18

From Mercatus:

The general conclusion of academic research suggests that targeted economic development subsidies don’t lead to broad-based economic growth or improvements in community welfare when measured against comparison cities….

Moreover, targeted subsidies are most often used to benefit large, highly-visible corporations rather than small local businesses. As a result, struggling local businesses must pay higher taxes to fund public subsidies for politically well-connected larger corporations.  —“Amazon HQ2 Is the Only Competition Where the Losers Are Winners: Why Economic Development Subsidies Hurt More than They Help,” 11-13-18

This time, we’re not questioning past subsidies — $23 million in cash promised to Amazon or the $16 million in taxpayer largess donated to Nestlé. Today’s Sun Gazette article reveals a new $11.5 million, under-the-radar, rent subsidy for the U.S. Drug Enforcement Agency (DEA), which occupies over 500K square feet of space on Army Navy Drive in S. Arlington:

Arlington County Board members next week are slated to vote on an incentive-grant package totaling that amount handed out over the course of 15 years and aimed at reducing rental costs for the agency….

Despite the immensity of the possible cash handout, the item currently rests on the County Board’s “consent agenda,” and will only be pulled off for public discussion if a board member makes the request. —“Arlington may shell out big bucks in effort to retain DEA,” 4-17-19

Analyzing the fiscal justification of reducing the DEA’s rent for the next 15 years is difficult to manage in a short blog post. The crucial point is this item’s placement on the “non-public” portion of the County Board’s April 23 consent agenda (Item 32). Unless a board member (prompted by a citizen’s request) pulls it from the consent agenda, this incentive package will be approved automatically without any public discussion.

Doesn’t an incentive package worth $11.5 million (the Gazette calls it $12 million) deserve more scrutiny? This Arlington-taxpayer-funded grant isn’t simply a bonus for the federal government; it directly benefits Clarion Partners, the owner of the space DEA is occupying. On the same consent agenda (Item 33), Board members also will hand over $862,500 to Gerber Products Company from the state’s Commonwealth Opportunity Fund.

TAKE ACTION: Contact the County Board if you want greater scrutiny of Arlington’s economic development subsidies. Ask Board Chair Christian Dorsey to pull Item 32 from the board’s consent agenda. Then, pose your questions directly to board members via email or in person at the Board’s recess meeting on April 25. —The Reality Chick

April 05, 2019

Will Amazon Be Good For Arlington?

A lot of folks are asking whether the Amazon deal will be good for Arlington? Given the county’s propensity for hype and consistent lack of candor, it’s hard to know for sure. Here’s what we do know: Crystal City has been a virtual ghost town for far too long. We need a catalyst to rejuvenate this important business corridor.

Many argue that Amazon abuses its workforce, undercuts community-serving brick-and-mortar retail with predatory pricing, shifts its tax burden onto other taxpayers, makes tons of money and doesn’t need another taxpayer-funded handout. All true. But Nestlé is hardly a shining example of corporate social responsibility, and yet we gave it a relocation incentive package valued at over $16 million. Precious few Arlingtonians complained about that deal (full disclosure: I objected).

Here’s another question frequently posed by Amazon critics: Instead of attracting new businesses, why couldn’t we simply convert our empty commercial office buildings into residential ones? Short answer: Arlington has significant deficit spending on the residential side.

Table 6 in GMU’s fiscal and economic impact analysis of the Amazon deal uses revenue and expenditure figures from Arlington’s FY2017 CAFR to document that we are spending at least $850 more per resident than we are receiving in tax revenue from residential sources. [Note: In this analysis, apartment buildings were counted as “residential” in the revenue and expenditure calculations. Normally, apartment buildings are categorized as “commercial” revenue sources.]

GMU’s analysis understates Arlington’s actual spending on education (a “residential” expenditure) by about $400 per resident. [Audited numbers in the CAFR show that Arlington spent closer to $22K per student rather than the $18K+ per-student figure GMU quoted in its analysis.] Thus, the $850-per-resident deficit spending figure is a conservative estimate. One way to offset residential deficit spending is with revenue surpluses that are typically generated by commercial properties (office space, retail, etc.) and businesses operating in Arlington.

GMU’s analysis emphasizes the imperative of balancing residential growth with commercial growth (p. 11):

These differences in the percentage shares for revenues and expenditures between residents and non-residential functions explain why it is fiscally important for the County to balance residential and non-residential growth.

When Arlington fails to collect sufficient commercial revenue to offset its residential spending deficit, then it must cut spending, raise the tax rate (and/or assessments) or use a combination of the two to balance its budget. The County Manager’s proposed FY2020 budget combines some spending cuts with a 1.5-cent real estate tax-rate increase (on top of assessment increases). The County Board subsequently bumped up the advertised tax-rate increase to 2.75 cents per $100 of assessed value.

Given that Arlington’s 4th quarter development report lists over 11,000 new multifamily housing units under construction, recently completed or approved and on the drawing board, we can expect millions more in residential deficit spending in the coming years. Using APS’s surprisingly low student generation factor for market-rate elevator apartments (0.08 students per unit), just these units alone will add roughly 880 new students to our already overcrowded school system over the next few years.

In this short blog post, I’ve demonstrated the fiscal necessity for ongoing commercial growth. Whether Arlington can truly afford a $23 million “incentive” cash giveaway to Amazon is another question, one that I hope to address in my next blog post. Stay tuned. —The Reality Chick