Now You See It, Now You Don’t

hocus_pocusby James A. Bacon

Henrico County government officials, who have campaigned in support of a 4% meals tax referendum in every way conceivable short of actually saying, “Vote for the meals tax,” have released a list of “expenditure cuts, absorptions and efficiency savings” to document their claim that the county has “cut $115 million and 646 positions from its budget.”

In a previous post, I criticized that claim on the basis that it reflected not  real-world cuts to spending but mainly cuts to budgeted spending. Backtracking on a budgeted spending increase is not the same as an actual cut. The reduction in real-world spending was more like $22 million.

We now have more data to appraise the objectivity of the county’s claim in light of the fact that state law prohibits local governments from advocating positions on citizen referenda. On its Henrico Meals Tax Facts website, county officials have detailed 19 specific savings. It appears that the county did institute some genuine cost-saving efficiencies. But it is also evident that there is a lot less to that $115 million number than meets the eye.

The first example of hocus pocus is a $16.5 million line item described as “utilization of one-time funds for schools to avoid layoffs.” Similarly, there is a $13.4 million line item for “replacement police, fire, & school vehicles with one-time funds.”

The county is equating the expenditure of $30 million in one-time funds to  budget cuts! Since when are “one-time” funds not real money? Someone please explain to me how spending real money equates to a cut!

In another instance of abracadabra, $20 million in savings came from “eliminating/unfunding” employee positions in general government and schools and another $11.5 million from “freezing” positions. What the document does not tell us is how many of those positions had been budgeted but never filled — eliminating phantom positions. What we also don’t know is how many of those positions were eliminated permanently due to the restructuring or re-engineering of operations, and how many will be refilled as soon as the county gets the money to do so.

There do appear to be some genuine savings: more than $28 million in “across the board reductions” to government and school spending, plus cuts for conference travel, cuts to tuition reimbursement and a reduction in technology replacement funds. But it’s hard to know how much of that savings is phantom cuts from the “budget,” how much was permanently stripped out of the budget due to restructuring and re-engineering, and how much will reappear as soon as more money is available.

The county did achieve a reduction of $9 million by refinancing its debt. That is laudable, and it does constitute a “savings.” But it did not affect county school operations and is hardly indicative of hardship or self-sacrifice. The only evidence of restructuring/re-engineering the cost structure of government appears to be telecommunications efficiency savings ($1.3 million), vehicle-fleet downsizing ($1.1 million) and lower utility bills from energy savings ($480,000). Woo hoo! Three million dollars in costs permanently engineered out of the county’s $1.3 billion in government and school expenditures.

Bacon’s bottom line: Two conclusions: First, the $115 million number is a sleight of hand: at a minimum, $30 million (expenditure of one-time funds) should not have been included. Another $30 million in personnel savings, much of it consisting of phantom cuts, is arguable. Such prestidigitation encourages voters to distrust their county leaders.

Second, when Henrico County has restrained spending, it has repressed expenditures mainly through short-term palliatives. It has not restructured or re-engineered operations to permanently lower costs. When revenues rise, spending will ineluctably rise as well. If voters approve the 4% meals tax, the $18 million will fund business-as-usual operation of government and schools.

No more pulling rabbits out of hats. Henrico County needs to adopt a new approach that re-thinks government from top to bottom, stem to stern, that lowers the cost of government: online learning for schools, implementation of smart-city technologies and the application of fiscal analytics to planning and land-use decisions.

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3 responses to “Now You See It, Now You Don’t

  1. still curious how Henrico stacks up on a cost per capita basis against other counties.

    Not saying they cannot – and should not be a leader but are they terrible right now on that aspect or are they not bad?

    • I’ve looked at the comparative data published by the state, and it’s hard to say. Henrico might spend more in a particular area — but who’s to say they aren’t delivering a higher level of service? They might look really lean in another area. But maybe their service sucks. Unless you know you’re comparing comparable levels of service, you can’t tell if they’re doing a good job or not.

  2. what would be needed to better understand how a given county conserves tax dollars?

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