Bacon's Rebellion

James A. Bacon


 
 

Tough call.

Too Small to Govern?

 

Highland County, population 2,500, tests the limits of Virginia's system of local government, which presupposes a tax base large enough to support mandated services.


 

Robin Sullenberger is arguably the hardest working man on the planet. In the daytime, he drives 70 miles over the mountains – an hour and a half, one way -- from his home in Highland County to his office in Harrisonburg, where he runs the economic development program for the Shenandoah Valley Partnership. Evenings, he serves as chairman of the Highland County board of supervisors, a job made more demanding by the fact that the county can’t afford to hire a county administrator. Weekends, he helps his wife run their cattle farm. As he says without pretense or exaggeration, “My typical day is 12 to 14 hours long.”

 

Fortunately for Sullenberger, the day job is going well. The Shenandoah Valley, though not without its challenges, has one of the lowest unemployment rates of any region in the state. But the evening job, providing government services in Highland County, isn’t much fun right now. He’s looking at a 13 percent increase in the property tax rate this year. As a large landowner himself, he will feel the voters' pain.

 

Governing Highland County presents special difficulties: It has the lowest population of any county in the state, about 2,500 – which also happens to be the lowest of any county east of the Mississippi River. As Sullenberger has learned, municipal government is an enterprise that benefits from economies of scale – which Highland lacks. Try operating a countywide K-12 school system with 300 children. Try running a social services program when placing two kids into unbudgeted protective care plunges the county into budgetary turmoil. Don’t even ask about un-funded state mandates. Says Sullenberger: “They’re phenomenally detrimental to us.”

 

Highland County is more than a curiosity, more than a municipal Ripley’s Believe it or Not. Its experience could portend the fiscal woes of other Virginia counties that are losing population. As manufacturing activity continues to move off-shore, dozens of Virginia mill towns and rural communities are losing their economic underpinnings. Even agriculture is a marginal proposition in counties isolated by mountain ridges and two-lane roads. Young people who leave to pursue higher education rarely return. But as the population shrinks, rigid state mandates don't retract. The citizens who remain behind are forced to cinch their belts and find a way to support an increasingly urban, 21st-century level of government services.

 

To visit Highland County is to take a step back to in time. Billing itself as “America’s Switzerland,” Highland offers stunning vistas of wooded mountains and valley farmland. Its 250-person county seat, the town of Monterey, hosts the annual Maple Festival that celebrates the opening of the trees and the making of maple syrup. But the county, far off the beaten track, has never been an attractive location for industry. The population, which stood at 5,647 in 1900, has declined steadily to 2,518 a century later.

 

The economic base is largely agricultural, but even that isn’t very competitive, concedes Sullenberger. “It’s become very difficult for pure farmers to make a living. What you find now is more part-time farmers. Farmers have to supplement their incomes through various part-time and full-time jobs.” Highland's location is so remote and the workforce so small that few businesses have an interest in investing there.

 

Beneath the placid surface, however, Highland’s economic base is churning: The county is becoming a haven for urban refugees, many of them from the Washington, D.C. area. Attracted by the isolation and beauty, outsiders have snapped up crumbling old farmhouses and fixed them up. Some outsiders move in to stay, creating an eclectic mix of intellectuals, business executives and what Sullenberger describes as "old-style mountain folk."

 

Many home buyers treat their residences as vacation homes. From a tax standpoint, absentee property owners are a mixed blessing. They contribute to the tax base and demand little in the way of services. That helps keep the tax rates low – only $.55 per hundred dollars of assessed value. Even if the board of supervisors hikes the rate to $.62 per hundred, as Sullenberger fears it will have to do, it’s still low by comparison to other Virginia localities.

 

But outsiders also bid up real estate prices. “That creates a false sense of wealth,” Sullenberger says. While county residents may be land rich, most are cash poor. At $23,110 per capita in 2000, Highland County incomes were 25 percent below the state average. Raising taxes is not a formula for rural prosperity. Says Sullenberger: “People own several hundred acres of land, but it’s not terribly productive in terms of income. A lot of people have been forced to sell.”

 

High land values hurt again when the state dispenses funds for K-12 education. The state relies upon a complex formula that calculates a locality’s “revenue capacity” to tax its citizens. Highland ranks among the highest-capacity municipalities in the state – 121st out of 135th, comparable to larger, suburban counties like Hanover and James City. By contrast, its “revenue effort” – a measure of how much it actually taxes itself compared to its revenue capacity – was the fifth lowest in the state in 1999/2000.

 

By urban standards, Highland County doesn’t exert itself fiscally. But Highlanders don’t believe that government ought to provide every service. Volunteers staff the fire departments. Civic clubs and church organizations provide the means for the community to help those in need. Says Sullenberger: “The county subsists on volunteer efforts.” Trouble is, the state doesn’t count the time or or money donated to volunteer efforts when calculating “revenue effort.”

 

Sullenberger has lobbied state officials to cut Highland some slack but can’t find much sympathy. “We’ve been hurt by our school system’s record of achievement," he says. "Comparatively, the achievement scores are high. Of the 30 kids in the graduating class, 75 percent went on to higher education. People say, ‘You seem to be doing OK.’”

 

At some point, the system cannot sustain itself. Classes are shrinking dramatically. There were only 13 children in the 2001-2002 kindergarten class, and projections say the number could fall below 10 within five years. A school system that small can’t efficiently support the administrative overhead required by legislators and bureaucrats in Richmond. “You run into a ceiling,” says Sullenberger. “We’ve had to face it with our school system. You get to a level where it’s not economically feasible.”

 

As a professional economic developer, Sullenberger hopes that economic development can stabilize the population and tax base – but he's realistic about what might be achievable. Perhaps Highland's most important initiative is bringing high-speed Internet connections to the town of Monterey. Broadband connectivity will make it possible to bring distance-learning labs to the schools, will provide locals a telecommuting alternative to driving outside the county for employment, and should make the town’s incubator more attractive. Already, the small facility has attracted a tenant from Richmond.

 

The best prospect for economic development may be tapping the resources of newcomers. One man from Pennsylvania, a spelunking enthusiast who has owned property in Highland County for years, owns a company that assembles small, high-tech cameras used to inspect wells. The businessman is about to move the operation to Highland County, creating about a dozen high-quality jobs. It’s exactly the kind of business the county wants, says Sullenberger: small and environmentally benign. Meanwhile, land developers have begun sniffing around. The county has received its first subdivision proposals.

 

But Sullenberger treds carefully. People choose to live in Highland County because it offers the kind of life they’re looking for -- and they don't want to ruin it. “Many of the people who move to the county feel they have found utopia,” he says. Although no one wants to change the county's distinctive character, old-timers wouldn’t mind tweaking things. They'd like to create enough economic opportunity to give their children a reason to stay in the county. “A part of the society – younger people in particular, people who have been there all their lives– would like to see some development.”  

 

Opinions vary as to what is appropriate and what is not, says Sullenberger. “It’s something we work on non-stop.”

 

Jobs… tax base… development… quality of life. These are the basic buzzwords in debates played out in rural counties across Virginia as each community seeks to define a vision for its future.

 

-- April 21, 2003

 

 

Bring Home the Bacon

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