From a column published in October edition of The Henrico Monthly:
by James A. Bacon
Before pulling the lever this November on the meals-tax referendum, Henrico citizens should ask themselves: Are they satisfied with county government that conducts business as usual, posing false choices between raising taxes or cutting services? Or would they prefer proactive government that adopts cutting-edge strategies to control costs, grow the tax base and improve the quality of services?
There’s no denying that Virginia local governments have seen better times. Revenues for most cities and counties have yet to recover to levels that prevailed before the Great Recession. Henrico County runs a tighter fiscal ship than most, as evidenced by its AAA bond rating, but its property-tax revenues have lagged, and big liabilities are looming.
The local-government share of the Virginia Retirement System’s unfunded pension liabilities amounts to $15.2 billion – Henrico’s portion is $507 million – and the state is compelling localities to accelerate payments into the system. The new rules could cost Henrico about $15 million next year, says Budget Director Barton Hinton. Also next year, state and federal stormwater regulations will go into effect that likely will force counties to spend millions more each year on mitigation. No one is sure what those costs will be for Henrico, but they could run into millions of dollars yearly – costs that, according to Hinton, aren’t included in the $100 million budget gap the county projects over the next five years.
Critics acknowledge that Henrico faces tough decisions. But the county’s position – “without new revenue, significant cuts may have to be made”– represents a bankruptcy of the imagination and an appeal to fear. Tax opponents have offered a litany of savings that county officials have waved off, from selling the county golf course to paring programming on the public access channel and charging insurance companies for county ambulance rides.
Contrary to the claims of county leaders, Henrico has not cut spending to the bone. “Over the past four years, Henrico has cut $115 million and 646 positions from its budget,” trumpets the Meals Tax website. But the numbers are hocus-pocus. In the county’s estimation, backtracking on budgeted spending increases or budgeted hires counts as a “cut.” Worse, the county counts $30 million in “utilization of one-time funds” to avoid school layoffs and pay for emergency vehicles as cuts.
Really? Spending “one-time” funds counts as a cut? Abracadabra! Now you see it, now you don’t.
What has Henrico County done to restructure and re-engineer the cost of government operations? Precious little. Most of its real cuts (as opposed to phantom cuts) were temporary – not filling vacant positions, cutting travel to conferences, deferring capital spending – and will bounce back as soon as money is available. The tally of permanent savings runs only $3 million – from telecommunications efficiency savings, vehicle-fleet downsizing and lower utility bills from energy savings. Three million dollars out of a $1.25 billion budget!
One can make a reasonable argument that the county needs a short-term revenue boost to get over the hump. Unfortunately, if voters approve the tax, which is expected to raise $18 million a year, it will run on autopilot long after the short-term budget crunch has passed. It will recede into the background and supervisors are not legally required to revisit it.
Voting “yes” on the meals tax takes the county’s leadership off the hook for enacting long-term reforms. Consider three broad strategies that no one is talking about.
First, experiment with Massively Open Online Courses (MOOCs) to reinvent Henrico’s school system. Look to the example of Richard Bland College in Petersburg, which is using MOOCs to teach foreign languages. Richard Bland is outsourcing its instruction to an outside vendor that specializes in online learning. The college promises a pupil-to-teacher ratio of ten-to-one, and it charges only $4,000 per year for a full course load. K12 Inc., based in nearby Herndon, is one of many companies that provides comparable services to school systems. Don’t tell me Henrico, which spends more than $9,200 per pupil, can’t find a way to save money and improve educational outcomes. Read more.
For a similar take on Chesterfield County, click here.