Bacon's Rebellion

Missing George Fitch More Every Day

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by

James A. Bacon
in

Jerry Kilgore has boxed himself in a corner on the tax issue and has no room to maneuver. Now Gov. Mark Warner has joined Tim Kaine in pummeling him, landing punch after punch. Kilgore is acting as if he doesn’t have any fight left in him.

In a recent fund-raising letter, Warner, who heretofore has avoided criticizing Kilgore, attacked the Republican candidate for governor for resisting his 2004 tax plan. In today’s Richmond Times-Dispatch, Jeff Schapiro describes Warner’s argument this way:

Warner refers to Kaine as his partner in the 2004 struggle that led to a $1.4 billion tax increase. The widely backed plan, Warner says, was resisted by Kilgore-led Republicans who “stood against us every step of the way.” Warner chides Kilgore for proposing “massive” bond-backed debt, for urging a voter veto on the budget, and for pushing unsustainable tax cuts and transportation spending. “That’s the kind of fiscal irresponsibility that got us into trouble in the first place.”

How can Kilgore respond? Despite opposing the 2004 tax hike, he undercuts himself by saying he doesn’t want to undo them. Instead, he proposes targeted tax cuts like an income tax credit for parents buying school supplies. Now, there’s a proposal that will move the masses! Despite a budget surplus that grows bigger every month, rendering Warner’s tax increases more and more superfluous, Kilgore has seemingly abandoned the issue.

Kilgore needs to take the battle back to Warner and Kaine. Here’s what he needs to say: When the budget crisis was waning in 2004, you jacked up spending, ignored the economic rebound that was already occurring, and raised taxes that many people said were never needed. When the rebound grew stronger in fiscal 2005 and revenues came rolling in, you refused to admit you’d made a mistake. As the surplus grows today, you still refuse to give anything back to the taxpayers. You’re writing a blank check to the politicians in Richmond who will find a way to spend every penny — and still want more.

Warner and Kaine are acting, despite massive evidence to the contrary, as if their 2004 tax increase was vindicated. That’s largely because Kilgore is too timid to challenge them. I shake my head in amazement and disappointment.

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  1. Anonymous Avatar
    Anonymous

    Kilgore’s box is not so much his fault, but the fault of his party. The conservative republicans have lost most credibility with Virginians when it comes to managing finances. For social issues they are rock solid with the conservative crowd, but when it comes to managing the business of the state, they are AWOL.

    Voters that thought the Republicans would control governmental spending were all saddened when Allen and Gilmore grew bureaucracy at a faster pace than even a Kennedy could hope to accomplish in the same position.

    Kilgore follows this up with a campaign platform based on new tax cuts AND new spending. Voters have sniffed this out.

    So, while Kilgore would be in a great position today if he had proposed NO new government programs AND a budget cut, he alas is stuck proposing the exact type of spend, spend governance that got us in trouble in the 90’s.

    if I was Kaine, I would immediately break out the flip charts showing the difference in spending and tax revnue between the candidates. I would then add at every single opportunity the line that unlike Mr Kilgore’s budget suggests, Virginia hasn’t printed its own money since 1865.

  2. Anonymous Avatar
    Anonymous

    for a state worker bacon (right?) you seem to prefer kilgore, which i guess i no problem, but if i were you i wouldn’t “rock the boat too much” since it is apparent that you sit in your 10 by 8 and blog all day…tax dollars at work i guess?

  3. Anonymous Avatar
    Anonymous

    The financial disaster that is the federal budget deficit isn’t helping any. It is all but impossible for a Republican at any level to run on claims of fiscal sanity. Look at the bloated county governments around Virginia managed by Republican supervisor majorities. The weekly here recently listed 275 Chesterfield COUNTY employees making $75K or better.

    We refused to raise taxes to pay for Vietnam and suffered, and now we have another expensive war coupled with the Gulf Coast expecting a federal bailout.

  4. James Atticus Bowden Avatar
    James Atticus Bowden

    Didn’t your Mother teach you that you can not be all things to all people? Be yourself. That is the problem, isn’t it?

    Jerry Kilgore will win the election, but I think it will be close.

    I helped set up a fund-raiser for the GOP in the 1st Cong District on Sep 17, but couldn’t attend because of a wedding in a friend family. (Got that priority right) They have a wonderful extended family of Natives and married-in-Move-Ins. Great family.

    They are reliable sign-in-the-yard Conservatives. Truly, probably in the middle of Virginia’s opinions on issues – they aren’t the agenda conscious ideologue I am. Better for them.

    The father of the bride came up to me to talk politics. He was just shaking his head about this election. He will go and pull the lever for Kilgore, but there is no enthusiasm. He is disgusted about the taxes, but there is no one to champion this issue for him.

    The polls about widespread support for the tax increase show good numbers, but they are weak – really. The same polls supported the Transportation Tax Scam Referendum in 02 and despite the big money, big media, and most politicians of both party support folded like a house of cards once the opposition organized with a voice.

    VCAP is working at the local level in House races. I don’t know of anyone with Commonwealth stature speaking the Conservative truth on the Tax Hike and Surplus of 04. I haven’t heard Bill Bolling or Bob McDonnells stump speech post-Labor Day. They are running against the opponents, not as champions of roll back for the tax surplus.

  5. Anonymous Avatar
    Anonymous

    It’s a great message: the tax hikes were unecessary (but welcome, I’d love to spend em!)…. and we need to raise taxes even more to pay for transportation!

    Glad to know Jerry’s got your support even when he’s diametrically opposed to everything you claim to believe in. No need to worry about your opinions then!

  6. Rob Whitney Avatar
    Rob Whitney

    James-

    Simple fact is the average citizen does not realize that they were overtaxed by $1000 per family this past year. Politicians for the most part will spend the money happily until the citizens rise up and do something, elections are not always the answer.

    Many of the conservative leaders are forming a group now to educate the citizens and engage them on this and many other issues. Visit the website http://www.afpva.org

  7. Anonymous Avatar
    Anonymous

    Rob – perhaps your whole take on taxes is off. Perhaps, just perhaps, the people do not think they were overtaxed. Perhaps, and hang in there with me on this one, perhaps they see their contribution as an investment in public services that they want to see delivered.

    i tend to agree with Jim Bacon, people don’t mind taxes as long as they know their dollars are being spent as efficiently as possible on programs that deliver real value. The anti-tax sentiment is real, but I think it is superseeded by a general consensus among folks that they want government to work well and efficiently. We can then dabte about the scale, services, and programs, but the idea of starve the beast is simply not politically astute or realistic when it comes to managing public services.

    And I apologize about this being anonymous, I will register for future posts.

  8. Anonymous Avatar
    Anonymous

    Anon 10:15 nailed it right on the head!

    The amount of money spent on paying government workers is obscene. I personally know of several Fairfax County firefighters that make over 90K per year and works 9 days a month! The ones that work overtime can expect to make well over 100K! No college degree is required….. let’s not even get into the public school systems.

    Jim, I think you could just as easily say that Gilmore and Allen are the folks who jacked up spending and didn’t provide a way to pay for their programs, i.e., the car tax repeal, and no parole among others. Voters know this and that is why Kilgore isn’t going over big.

    In addition, Warner is 100% correct in his characterization of Kilgore. Kilgore is likely not firing back because the proof is overwhelming and he’s better off to ignore the situation entirely. It’s either that or his handlers are worse than they appear.

    I would think that the Conservative Movement has seen better days. The Iraq war, the Presidents ratings, their notoriously poor handling of finances, and the federal budget deficit don’t make for a good recipe. Basically, they are running out of issues to run on.

  9. Jim Bacon Avatar
    Jim Bacon

    Anonymous 10:13, For the record, I am not a state employee. I am self employed — I publish electronic newsletters for a living. I have the luxury of blogging at any time of day because I sit behind a computer for most of it, and don’t have anyone to answer to but myself.

    To all those who have made the point: Yes, Republicans — especially in Congress — have lost a lot of credibility on the fiscal front. They have proven themselves as spendthrift as the Democrats. That’s why large swaths of the Republican Party are disgusted and dismayed. But where else can they turn? To the Democrats who shout and scream on those rare occasions when Republicans do try to show some fiscal restraint? I don’t think so.

    Anonymous 11:20: You are correct, state spending did increase under Allen and Gilmore. Here’s the difference — the 90s were a period of rapid economic expansion and the state was flush with revenues. Allen and Gilmore did not increase taxes. Au contraire, Gilmore, knowing that the legislature would spend every dollar that came in, tried to rein in spending by passing the car-tax rebate to taxpayers. As poorly conceived as the car-tax rebate was, Gilmore was right to give money back to the taxpayers in some form.

    Warner reined in spending for two years of recession and budgetary crisis. Now that the economy is growing again, he’s cranked up the spending machine as well. But, when it’s evident the state is generating more in taxes than needed to pay for his programs, instead of trying to give money back to taxpayers, he’s saying the state needs it more.

    Warner has done a lot of positive things, and I’ve written about them elsewhere, so I’m not going to repeat them here. But his tax increase was unnecessary and he just won’t admit it. Of course, I don’t expect him to. But I do expect Jerry Kilgore to press him on it.

  10. Anonymous Avatar
    Anonymous

    Jim, I gotta have fun with one of your lines.

    “Allen and Gilmore did not increase taxes.”

    No they didn’t raise taxes.

    The same way Kaine didn’t increase taxes in Richmond.

    The value of tax dollars increased on both fronts; income for state and property for local governments.

    Strange how different wordings suit different issues. Spin, nonetheless.

  11. Anonymous Avatar
    Anonymous

    Shame on you, Anonymous 12:28. That’s beyond the pail.

  12. NoVa Scout Avatar
    NoVa Scout

    I think you meant “beyond the pale”, but how so?

  13. Not Larry Sabato Avatar
    Not Larry Sabato

    I think that was sarcastic?

  14. criticallythinking Avatar
    criticallythinking

    nova scout, I think he was referencing the “pail” ad.

    Anon 12:28: There is a difference between government NOT raising income taxes but collecting more money because incomes rise, and government NOT raising property taxes but collecting more money because property values rise.

    I’ll mention two differences, one a legal difference, and one a practical difference.

    First, the legal difference. State law says that each year, real estate tax rates should be lowered based on increased assessments such that the total tax revenue is constant (or maybe there is 1% growth allowed). If a county wants to set the tax rate any higher, they must advertise a public hearing to discuss the TAX INCREASE.

    In 2005, in March, our CBOS put out such an announcement, noting that by LAW our tax rate should be 88.5 cents, and they wanted to INCREASE that to 1.07.7. Eventually they set it at around 92 cents.

    So when Richmond chose not to lower the tax rate by the amount the law required, they announced a tax INCREASE.

    The PRACTICAL argument is this: If you earn more money, you pay the same amount of the next dollar you make in taxes as the last dollar. But that comes out of a new dollar you didn’t have before. So while your “tax payment” DID increase, so did the income you received — so you have the money to pay for it. If you earn LESS, you pay less.

    But the property tax is based on a “value” of your home that gives you no extra money. The government simply tells you your house is worth $100,00 more, and then they tax you on that extra $100,000. EXACT SAME HOUSE, HIGHER TAXES ON THE HOUSE.

  15. Ray Hyde Avatar
    Ray Hyde

    Right you are, critically.

    I have often said property tax should be a two part deal: x mils but not to exceed 10% of the income of the person who lives there.

    Otherwise, newcomers paying outrageous proffers will soon tax existing residents out of their homes, fixed incom or not.

    My property tax bills have been going up faster than my income. It can’t continue forever.

  16. too conservative Avatar
    too conservative

    I agree with the title.

  17. Anonymous Avatar
    Anonymous

    “But the property tax is based on a “value” of your home that gives you no extra money.”

    Glad to know that the paragon of conservative economics is now that homes cannot increase in value. Can they still descrease in value? I haven’t read that far in my revisionist economics 101 yet.

  18. NoVA Scout Avatar
    NoVA Scout

    But Ray is reviving a point that keeps dying away when people rail against property tax “increases” i.e., increased tax payments caused by rising values. I would have thought that given the arithmetic of the effect of home values in a rising market on tax payments, there would have been one or the other of the candidates who would have been willing to attack the whole premise of using ad valorem taxes to fund state/local government. The system is antiquated, inequitable and difficult/complex to administer. The downside, of course, is that there would have to be increased reliance on income taxes and there are thorny problems of how one reconciles local versus state needs in a new tax structure. But I have not heard even the people who rail against increased home values as tax increases say the obvious: ad valorem property taxes are the problem and we need an exit strategy.

  19. subpatre Avatar
    subpatre

    “My property tax bills have been going up faster than my income.“
    Ray still hasn’t figured out the formula controlled by his county supervisors: raising taxes = raised taxes
    He’ll probably vote for Kaine, who’s advertising he “cut taxes” as Mayor of Richmond….and tax bills went up. Fortunately for the Commonwealth, more than half it’s citizens still “get it” that the reason for increased tax is increased budget.

    It has nothing to do with the worth of the property; it has everything to do with how much money his jurisdiction extracts. It has nothing to do with how many or how valuable new houses are; it has everything to do with how much capital and services new residents demand.

    Yes, we miss George Fitch who slashed actual taxes in Warrenton while the value of properties increased.

  20. Ray Hyde Avatar
    Ray Hyde

    I don’t thinkthere is anyone who doesn’t understand the differences between lowering the tax rate and actually lowering the amount of tax dollars that are paid.

    I don’t beleive Kaine can do anything for local property taxes and I will hold my local supervisors to account for that.

    The fact remains that increasing valuation of homes opens a door of opportunity that is just too hard for tax administrators to fully close through lower tax rates. One reason that door is hard to close is that residents are calling for increased services, as I do myself.

    Those administrators still need to recognize that since the tax is paid out of your pocket, not your home, that the property tax is essentially an income tax that is not related to income. It is part of their job to see that the actual taxes paid don’t increase faster than the money available to pay them. Otherwise they are dipping into the economy in a way that affects future revenues.

    However there is no formal means that I know of for the county to evaluate that, and I believe they simple dividee the demand for money by the housing valuation to set a new tax rate, more or less without regard to current citizens. It is part of the sentiment expressed elsewhere in this blog: if you don’t like it, go somewhere else.

    That sentiment has been expressed to me personally by two of my county supervisors.

    For a county administrator, the value of his resume is based on the value of the government he administers, so he clearly has an incentive to increase the value of his budget, whether he is a county administrator, sherriff, or school administrator. All those demands flow up to the supervisors, who set the rates.

    Since it is the new residents who are buying larger and more expensive homes, they provide the new money, and they command more interest from government than existing residents, who are presumably already cared for.

    All of those factors make it hard for supervisors to keep the budget the same, or even at a level amount considering the effect of new residents.

    For that reason, proffers on new residents wind up affecting valuations and the actual amount existing residents pay. Because there ar emany more of them than new residents, the cumulative amount they pay is high.

  21. Anonymous Avatar
    Anonymous

    An editorial from the Winchester Star:

    Needed Advice

    Noonan: Return to ‘Conservatism 101’

    It is seldom that presidential speechwriters attain a degree of fame or notoriety, but back in the ’80s, Peggy Noonan was one of the hottest folks around inside the beltway.

    Remember some of those famous speeches by Ronald Reagan, for example after the Challenger tragedy or on the 40th anniversary of D-Day (“the boys of Pointe du Hoc”)? That was Miss Noonan putting words on “The Gipper’s” lips.

    She later contributed her considerable talents to George H.W. Bush — “thousand points of light” are her words as well — and retained close ties to the White House until the first President Bush broke his promise on “no new taxes.”

    Now Miss Noonan, from her perch on The Wall Street Journal’s Opinion section, has once again questioned the fiscal proclivities of Bush family member — the current president.

    In a lengthy commentary last week, she took issue with the administration’s apparent belief that Americans, well, simply expect government to spend a lot — and perhaps indiscriminately — no matter which party holds power. And she confessed to thinking that “compassionate conservatism” was, in truth, a new and enlightened approach to “doing old business.” But now she knows she may have been wrong.

    “I never understood compassionate conservatism to mean, and I don’t know anyone who understood it to mean, a return to the pork-laden legislation of the 1970s,” Miss Noonan wrote. “We did not understand it to mean never vetoing a spending bill. We did not understand it to mean a historic level of spending. We did not understand it to be a step back toward old ways that were bad ways.”

    Her solution? A return to “Conservatism 101, using these words uttered by Gerald Ford as a starting point: “A government big enough to give you everything you want is big enough to take away everything you have.”

    Not a bad place to begin, but is anybody listening?

    So, is anybody listening?

  22. Anonymous Avatar
    Anonymous

    “It has nothing to do with the worth of the property;”

    That’s awesome! I’d better sell my house (since it can’t increase in value) and charge my bank with fraud for allowing me to refinance my mortage! Thanks for the tip.

  23. subpatre Avatar
    subpatre

    Anonymous11:07AM, charge your bank with fraud now…. if they’re 1)witholding taxes in your mortgage payment, and 2) increasing the witholding based on market value. Of course you knew that and just wanted to play stup.. uh, I mean ‘cute’, by pretending to mistake tax with market value. Haha, wink-wink and all that.
    —–

    Thank you Anonymous9:30AM for emphasizing “Conservatism 101”, also known as “restraining government size”.

    It’s sort of a shame to be talking about George Fitch here. He’s the Mayor responsible for the ‘Warrenton Miracle’ of lowering their real estate tax rate from $0.18 to $0.03, far more than offsetting any increased real estate values. He also reduced personal property rates from $2.20 to $1.00; again far more than offsetting inflation.

    Fitch accomplished all this by first applying ‘Conservatism 101, the bare basics, and then going to the next step with “Conservatism 201“, by increasing the efficiency of existing government.

    It’s a waste of time to discuss advanced techniques with people who complain about high taxes, but then say “ One reason that door is hard to close is that residents are calling for increased services, as I do myself.” Gnat, meet log.

  24. Ray Hyde Avatar
    Ray Hyde

    I don’t understand why you are acting so triumphant about this. I have already conceded your technical point that the supervisors are ultimately responsible for dollar tax increases because they set the rate. And, clearly, no one can complain about taxes paid for which they get their money’s worth, or for tax increases that are necessary because of inflation, or increased complexity of government due to higher population.

    I still maintain that 1) proffers hurt existing residents as much or more than they do new residents, and they hurt developers not at all. This argument is supported by independent studies. and 2) that when assessments increase by 100% as they will in my neighborhood, that you are correct, the supervisors set the budget, and determine the new tax rate that will support the budget. In a perfect world that would be a dollar amount equal to the previous budget adjusted for inflation. In the real world, that “new” source of money is too tempting for the supervisors and their administrators to pass up, so they goose up the budget and the tax rate to support their pet projects. The result of this is an unnecessary increase in taxes, which, even if well spent, comes out of someone’s pocket. It is in this area that I agree with your conservatism 101 argument: no one like unnecessary tax increases that feed someone’s pet project.

    The obvious problem is that we all have pet projects and disagree on which of them are necessary. There is no rational process for determining our priorities, so we rely on political parties and special interest groups. But this coulod be avoided by simply making priority setting a part of the tax collection process. Toll roads and congestion pricing are one way to do this, but a questionnaire as part of your tax for would work, too.

    Sure, the supervisors can be held to account, eventually, but in the meantime the money is still out of your pocket. And four year ellections, or worse, staggered elections, mean reckoning can be a long way off. For some members of the community, that pocket is empty, or nearly so.

    The real thrust of my comment, which you choose to ignore is that the property tax, in the end, is an income tax. I believe there should be some cap on property tax that is tied to income. Otherwise, there is no incentive for the government not to pursue property and land use rules that force the lowest income residents out. Now that is a regressive tax.

    Indeed, if that doesn’t work, the Supreme court now says the county can take your land under eminent domain, and sell it to someone who will pay higher property tax.

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