Big Spenders on the Virginia Peninsula

John Bull and Carol Scott with the Daily Press have written a perceptive article, “Awash in Cash, But Who Gets Soaked?”, detailing the surge in property taxes on the Virginia Peninsula: 58 percent on average since 2001. Soaring real estate assessments have allowed local governments to reduce nominal tax rates even while collecting record revenue and spending it all.

The danger is that local governments aren’t treating the revenues as a windfall. Rather, they’re hiring more employees and offering generous raises, decisions that will be hard to reverse if favorable economic conditions change.

Those financial decisions lay the foundation for a problem when the housing bubble deflates and local tax revenues grow stagnant.”The worst part will be when property values fall – and they will,” said Pete Sepp, spokesman for the National Taxpayers Union in Alexandria, a national anti-tax organization. “Governments will scream they don’t have enough money and there will be tax increases.”

The Bacon’s Rebellion blog has been issuing the same warning for more than a year now, though mainly with an eye toward Northern Virginia where real estate prices have been the strongest. Clearly, the danger is not limited to one part of the state. It’s gonna get ugly, folks, real ugly.

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5 responses to “Big Spenders on the Virginia Peninsula”

  1. Toomanytaxes Avatar

    It is amazing how little we learn. As I recall, Mark Warner & the General Assembly spent considerable time, effort & blood trying to fix this problem (over-spending in flush times). Moreover, every elected official in Virginia swore that they had learned their lesson. Yet, we see more of the same.

    While I strongly believe that governments at all levels overspend and tax too much, why haven’t these surplus revenues been devoted to transportation needs since that issues is supposed to be priority number one in the Commonwealth? Even in places such as Colorado with its TABOR (Taxpayers’ Bill of Rights) there are some provisions (I believe) for channeling budget surpluses into one-time capital investments. I also suspect that taxpayers might be more forgiving if surpluses went to transportation instead of expanding programs, hiring more employees and exceeding market rates for pay raises.

  2. James Atticus Bowden Avatar
    James Atticus Bowden

    Local governments are acting like people do with ‘free’ money. Not throwing a rock, but calling it ‘normal’ to spend every penny unless voters are vigilant and elected officials are actually leaders.

    The market can flatten on The Peninsula, but it doesn’t have to fall. Supply and demand. The demand with more government jobs and my generation of Yankees retiring and coming here – will stay up.

  3. Anonymous Avatar

    You are incorrect about TABOR and that is the problem. TABOR is not the free lunch fix everyone swoons over. TABOR says government cannot grow any faster than population growht plus inflation; surpluses get refunded to taxpayers. When times are good, it reduces the growth of government. But when economic times are bad, then the growth limits still apply, only the new starting point is the pared back budget. While costs grow, government must start out from the lower, recession-induced threshold. Governments cannot use good times to make up for bad.

    Why does everyone want the state to tell local governments what to do about their tax rate? Does the minority feel put upon? Too bad. Let the electorate decide, as they did in Suffolk, whether their elected officials should be returned to office based on their policies.

  4. Toomanytaxes Avatar

    3:51 Thanks for your perspective. Not everyone agrees about TABOR. I do find it interesting that a prominent NoVA businessman who regularly supports higher taxes, both statewide and in locally, was a large contributor to the now-failed effort last year to persuade Colorado voters not to override TABOR temporarily. I received a solicitation in the mail for a major event to raise funds for an organization that was opposing the Colorado ballot question that ultimately overrides TABOR for a period of time.

    But as they say, consistency is the hobgobblin of small minds. No small minds in Fairfax County!

  5. Virginia Centrist Avatar
    Virginia Centrist

    “Governments will scream they don’t have enough money and there will be tax increases.”

    And then, if tax increases are enacted to counterbalance stagnant revenues and growing needs in rapidly growing exurbs, the world will explode. Bodies will fly everywhere.

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