Boilerplate, Hocus Pocus and a False Choice


by James A. Bacon

So, Laura Lafayette, CEO of the Richmond Association of Realtors, has responded to my recent column in the Times-Dispatch regarding the Henrico County meals tax. Much of the column consists of boilerplate pro-tax talking points that you can find on the Henrico County’s supposedly non-advocacy “informational” meals-tax website. But she does raise a couple of points, one legitimate and one totally bogus, that must be addressed.

Fiscal prestidigitation. First, the bogus point. Lafayette argues that Henrico cannot cut costs without sacrificing the quality of education and public services. “In the past four years, ” she writes, “Henrico government has eliminated almost 650 positions and cut $115 million in expenditures.”

As I blogged previously, those numbers are illusory. Henrico has not cut “spending” by $115 million. Most of those supposed cuts consist of backtracking on budgeted spending increases. Actual spending peaked at $790.7 million in Fiscal 2009. Actual spending in Fiscal 2012 fell to $768.9 million — a real-world cut of only $21.8 million. As for those 650 positions it supposedly has eliminated, Henrico has a no-layoff policy! In the real world, the county reduced its workforce by about one-fifth of that number through attrition.

Lafayette may count wished-for job and spending increases as actual spending but I don’t. And I don’t think most Henrico citizens do either. There’s only one way to describe the numbers used by Henrico’s numbers, which Lafayette repeats uncritically: deceptive.

A temporary cash flow issue. But Lafayette does raise a legitimate point. In my column, I had argued that housing sales prices in Henrico had increased 11.8% and that rising assessments would raise roughly $18 million in new revenue — the same amount expected from the meals tax. Updated numbers, she writes, indicate that average sales prices have increased only 7.7%. She’s the expert; I’ll take her word for that.

She then argues that higher housing prices will not lead to an immediate surge in tax revenue.

Eventually, we will see an increase in property values. Eventually, higher property values will lead to increased assessments which will equal greater equity for homeowners and increased tax revenue for the county — eventually, not overnight.

Fair enough. The next property reassessment may not bring in as much revenue as I had expected, based on May 2013 numbers, and it may take longer for the higher housing-sales numbers to work their way through the system in the form of higher tax revenue.

How, then, should the Henrico County Board of Supervisors deal with a temporary cash flow problem? Institute a permanent 4% meals tax that that likely never will be revisited and never will be repealed? Or enact a temporary increase in the real estate property tax that can be revisited as assessments rise, and readjust the tax rate downward when tax revenues do come in? The board has lowered the tax rate before, and it can do so again. Evidently, Lafayette prefers a permanent tax increase.

False choice. One last point: Lafayette frames the entire tax issue in Business As Usual terms, proffering the false choice of higher taxes or reduced services. Here’s how I frame the choice: Henrico can continue doing business as usual, or it can get serious about prioritizing spending, reinventing K-12 education, deploying smart-city technologies and fostering more tax-efficient human settlement patterns.

Approving the meals tax will signal county official officials that the status quo is just fine and that nothing fundamental needs to change. A vote for the meals tax is a vote for lethargy and stasis.

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8 responses to “Boilerplate, Hocus Pocus and a False Choice”

  1. Thank you Jim. Well said. I’d love to see the RTD runs this on the editorial page.

  2. what the tax increases are for – is the optional school curricula that Henrico has chosen to fund over and above the required SOQs.

    the size of Henrico schools is roughly doubled over what is actually required for core academic curricula and funded from optional discretionary taxes.

    it’s a choice. you cannot have twice as many teachers than actually required and not see twice as big increased expenses when things like health care and pensions are taken into account.

    It’s a choice that people are pretending is due to some other reason – like if the county cut more personnel.. it would take care of the increased school costs.

    Even if it did do that – it would be a one-shot deal. The bigger problem is the enormous number of teachers relative to county employees that are the tail wagging the fiscal dog.

    the unfunded pension problem is not due to more PR staff than needed… it’s purely due to the size and scope of teaching employees.

    You’re not only paying teachers that teach core academics 80K a year – you also paying the coaches that handle sports, the folks that teach “band” and photojournalism 80K a year plus benefits.

  3. “A vote for the meals tax is a vote for lethargy and stasis.” Agree. And I agree with Larry. So let’s not give the system more money and force some decisions to be made. Let’s start choosing how many/how large the options, if any, should be. Talk about starting a rebellion . . .

  4. I still support the meals tax as a way to lessen dependency on property taxes.

    property taxes do drive up costs for affordable housing and are used as justification by the schools and law enforcement for higher salaries.

    eating out is more discretionary and I have no problem what-so-ever letting I-95 travellers helping to pay.

    Right now, I’m betting Jim Bacon is helping to fund Georgetown County schools…

  5. yup – as we speak, Bacon and family are paying a meals and accommodation tax!

  6. Peter Galuszka Avatar
    Peter Galuszka

    Must be raining down on the Sandlapper beaches! Why not just break out the “Scrabble” board? How about ‘Trivial Pursuit?” I think you need to toss your laptop!!!!!
    I bet BOTH Lauras think you’re nuts!

  7. Breckinridge Avatar

    I just hope Governor Wilder gagged on his Cheerios this morning reading that defense of a tax increase from his former aide. Laura, Laura, Laura…

    Look. She represents the people who sell houses. They hate the real estate tax. They are living by the little ditty they all sing at the capitol: “Don’t tax you, don’t tax me, tax that fellow behind the tree.” There is no way the real estate tax will do down because of a new meals tax, but she is also hoping (more logically) it won’t go up as soon or as fast.

    The question is does the county really need more money? Has it really done all it can do to provide truly essential services and eliminate duplication or niceties (with a nod again to Governor Wilder.) I don’t live there but my observation is a county with a communications department of 19 people (that was it, right Jim?) might have a bit more squeezing to do.

  8. The meals tax is not like your property tax where you get a letter with a piece of paper that often mentions several thousands dollars worth of “owe”.

    whereas if you take a little trip on I-95 ..say a days worth or two and along the way when you get gas you also get some food – in places you have no idea at all whether it has a tax on it…. it’s that “invisible” to you. You really don’t even know if there is a tax or not – at each place you stop. For that matter, you don’t even likely remember how much the meal was compared to the last one you bought.

    It’s close to a ‘stealth’ tax except for the anti-tax hawks.

    the biggest tax that I am aware of when I travel is usually the “accommodation” tax which does have a certain “ouch” factor when you’re realizing that the nightly cost on the billboard is a “bit” more.

    he’s what I’d like. the ability of voters to initiate referenda to rescind a tax or lower it. That would put the “taxers” on notice that people were watching and deciding if the taxes paid continued to be ‘worth’ it.

    What I do tend to have more trouble with is the tax this and tax that – and put it in a big pot to fund this and fund that without any real connection between the tax – and what it pays for.

    this is how a lot of counties collect taxes on automobiles then spend it on something other than transportation.

    Property taxes seem to mostly fund schools… with a 1% sales tax kicker to also go to schools and the other 1% roughly matching the county govt funding.. roughly..

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