One Battle Ends and Another Begins

goliathby James A. Bacon

Goliath won in Henrico County yesterday. The political class got its 4% meals tax yesterday, squeaking by with a two-point margin of victory. With an extra $18 million in revenue, the Board of Supervisors will be able to meet Henrico’s challenges without altering the way the county does business. The status quo prevailed. But the need for fundamental change remains and the losers aren’t going away.

County administrator John Vithoulkas and his team deserve enormous credit (or blame, depending on your perspective) for the victory. County management went to the mats over the past three to four months, organizing and attending some 80 public meetings. They pushed every button there was to push, seeking endorsements from the Fraternal Order of Police, the Henrico County Council of PTAs and every other group with a connection, direct or indirect, to county government. They spent more than $60,000 in taxpayer dollars on pro-tax propaganda that came within an inch of violating state law requiring a neutral presentation of the facts. And they recruited business groups who feared property tax increases to kick in $145,000 in a direct mail campaign to voters. In the end the Yes 4 Henrico Kids advocacy group probably proved decisive: Its appeal to East End racial grievances over poor schools showed up in lopsided pro-tax election results in several eastern Henrico precincts.

Arrayed against this imposing force was Sidney Gunst, developer of the Innsbrook office park and Ayn Rand disciple, who donated $10,000 to NoMealsTax.net as well as a handful of individuals who contributed mainly their time and effort. The redoubtable David lost this round. But he will be back, I am fairly certain.

(By contrast, Chesterfield voters rejected a 2% meals tax. Surprisingly, they approved the two bond referenda — one for school rehabs and the other for a new emergency communications system — that the tax would have funded. That will leave county officials scrambling for a new source of revenue, an outcome that they probably did not expect.)

What comes next in Henrico?

“I just hope that the citizens that voted for this tax will hold the county accountable for all that the county has promised,” Gunst told the Times-Dispatch. “Henrico has said that the meals tax is in lieu of a real estate tax increase and that it’s going to right their fiscal ship. I’m not convinced. Henrico’s going to be coming back to the well in my opinion.”

Gunst is absolutely correct to say that Henrico faces long-term fiscal challenges to which the meals tax will apply only a Band-Aid. But it may be a while before supervisors “come back to the well” for another tax increase. If booming house-sales estate prices are reflected in higher property tax assessments, the county could enjoy a double bonanza next year — meals tax revenues plus higher property tax revenues. County officials insist that no gusher in property-tax revenue is forthcoming. We’ll see. If they’re wrong, they’ll have some explaining to do.

While local governments across the United States are experiencing chronic fiscal stress, Henrico stands at the brink of a golden age if only it can jettison its blinkered, Business-As-Usual mentality. I have written extensively about the online revolution in education, the deployment of digital technologies to achieve smart-city efficiencies, and the application of fiscal analytics to foster growth and re-development that pays for itself. With its AAA bond rating and low real estate tax rate, Henrico is far better situated than most local governments to exploit these historic opportunities. The only thing holding back Henrico County is… Henrico County.

Passing the meals tax will leave Henrico supervisors fat and happy. Citizens will have to find other ways to jolt them from their complacency.

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14 responses to “One Battle Ends and Another Begins

  1. I wonder if there is a way to parse the difference between Henrico and Chesterfield. Perhaps the margin of defeat and victory was too small to show one. Did not passage require a super-majority? Somehow I recall that. If so the proponents had a substantial hurdle to jump in either case.

  2. I have a more mundane question that may take someone from the Sorensen Institute or allied to answer.

    It has to do with the how and why of county-initiated referenda.

    It appears that Dillon’s rule REQUIRES a referenda for a new tax – something DJ rankles at.

    but why would a county run a referenda on other things that are not “new” taxes but fairly typical expenditures?

    For instance, Spotsylvania just voted to upgrade their emergency radio system and rehab their schools without going to referenda.

    However, they did go to referenda a fews years back for road upgrades , some schools stuff and a VRE station. (Mind you they did not ask voters if they wanted to join VRE – that was a BOS decision.

    but why do localities take things like that to referenda especially when/if they are not tied to a funding source?

    of course I don’t understand people voting in favor of spending more money on something – and not knowing where the money is coming from – either.

  3. A simple answer could be that Henrico voted McAuliffe and CHesterfield voted Cuccinelli making it seem that Henrico is more liberal than the other.

    Now, Jim Bacon may not like that, but he could have checked the changing demographics when he moved there.

    • The world is closing in on Jim Bacon and his conservative ilk. For years the conservative establishment in Richmond has held dictatorial sway over the state through its asinine implementation of Dillon’s Rule. For years, progressives and moderates living in areas where the majority of the people are moderates and progressives have had Richmond’s conservative clap-trap forced upon us. Now, the worm has turned. It will be the conservatives living in areas with conservative majorities who will have progressive rules, regulations and taxes shoved down their throats.

      Jim thinks the Henrico Meals Tax is bad. He ain’t seen nothing yet.

      Payback is hell.

      Jim and his ilk should have opposed Dillon’s Rule while they still had an effective majority.

      Welcome to South Massachusetts, Jim.

  4. Rather ironic that you wrote this: “With an extra $18 million in revenue, the Board of Supervisors will be able to meet Henrico’s challenges without altering the way the county does business.” considering that Henrico undertook a pretty massive effort two years ago to do exactly what you suggested. In fact, it was called “Changing the Way Henrico Does Business.”

    Read it here: http://www.co.henrico.va.us/pdfs/finance/pdfs/ChangingWayHenDoesBus.pdf

    The whole point was to change the county’s approach, cut costs and become trimmer and more flexible. The result was a cut of $56.5 million. I’m sure that’s not good enough for you, and you’ll argue that they should have found a way to save $100 million instead, though.

    The reality here is that if you want to blame someone, blame the state for kicking the can of VRS along for 15 years, then imposing its unfunded responsibilities back on the localities, who were paying their share all along. now Henrico has to pay $508 million into VRS in the next 25-30 years. If that wasn’t hanging over the county’s head, it could allocate existing revenues toward the school system and elsewhere. But with that looming and other state and federal monies dwindling, it obviously needed a new source of dollars.

    What you seem to be suggesting is that Henrico cut the things that have given it a market advantage to begin with. That’s certainly a possibility, but it would be self-defeating. Businesses are not going to locate here if the school system becomes just another school system through teacher cuts, crowded classrooms and program cuts. Or if the real estate tax had to be raised. Or if services had to be cut. Yours is a short-sighted view of the realities of government and Henrico in particular.

    Here’s an interesting nugget. If you own a $200,000 home in Chesterfield and I own a $200,000 home in Henrico, you pay $160 a year more than I do in real estate taxes right now. In order to pay $160 in the meals tax once it’s implemented, I would have to spend $4,000 on prepared meals – about $11 a day, every single day of the year. Then we’d be even.

    So spare me this charade that this tax is somehow going to kill businesses and devastate someone’s wallet. If you live in Henrico, you’re already benefiting from low taxes. Quit bitching.

    • I recall that Jim’s primary point was that the county should be finding more enlightened and modern ways to generate wealth for all within the county, instead of imposing more long term taxes that typically postpone government policies designed to broaden the income pie for all county citizens.

      If my recollection is accurate, this is not “bitching.” It’s an opinion on how to generate more revenues for all based on what has been done elsewhere.

    • “Spare me this charade that this tax is somehow going to kill businesses and devastate someone’s wallet.”

      Who said that? Not me.

      It would help if you read what I said, rather than what you think I said. Henrico has done a fine job of old-fashioned belt tightening. It can do a bit more but not not enough to address its long-term challenges. My argument is that Henrico needs to undertake reforms that change the way it delivers government services — online education, smart-cities technologies and fiscal analytics.

  5. well to be honest, as soon as I hear “Ayn Rand disciple” I discount heavily.

    Ayn Rand said that ALL taxes are government theft.

    so that would be the first question I’d want an answer to from Mr. Gunst and if the answer was in the affirmative – I’d not consider him a legitimate voice.

    sorry. when you adopt a philosophy that says that govt is illegitimate – you’re done.

    • Larry, You display your ignorance of Ayn Rand’s philosophy when you describe it as one that says “government is illegitimate.” As Sidney has said a dozen times, Objectivists are not libertarians. Sidney believes there is a legitimate role for government — albeit a truncated one.

      When you apply a label and make an inaccurate assumption in order to cast someone into the outer darkness of political discourse, you show the narrowness of your own thinking. Sorry, dude, but it’s true.

      • I’ve read enough of Ayn Rands philosophy of government to know that 90% of most citizens including those in Henrico would not agree with it.

        the only thing she thought the govt should be doing is police and property rights.

        If you ask Ayn Rand admirers what Henrico should be doing as govt , it would not include 90% of what it currently does including schools.

        this is easy to determine – just GOOGE: ” Ayn Rand” and “government” and you’ll quickly know her philosophy.

        I do not misunderstand it… it’s crystal clear what here views were.

        so what are the things that Mr. Gunst would not have Henrico do?

        schools?

  6. They don’t like Immanuel Kant, either, those crazy maniacs! Ayn Rand was a whacko plagued with an off -the- chart and misdirected IQ

    • every single OECD country, advanced economy – on the planet has govt-financed schools and every single OECD country on the planet ranks at the top of literacy – on the planet.

      yet folks who agree with Ayn Rand believe that govt should not be doing education – regardless of OECD…

      Ayn Rand believed in policies that are most representative of 3rd world countries with “good” police and property rights protection but health care and education would be to 3rd world specs.

  7. Bacon was right about the Meals Tax. It was unnecessary given the steady increase in home values and the resultant increase in property taxes. However, progressives never miss an opportunity to add another tax. They know that, once implemented, a new tax never goes away. It just gets increased over time. Does anybody remember Jim Gilmore and the car tax “repeal”?

    Get ready for a lot more, Jim. You live in a Dillon’s Rule state now controlled by the Democratic Party. Welcome to South Massachusetts.

  8. It’s not like Henrico is a sluggard of a county. It’s in the top 5% in Virginia and for that matter – few counties nation-wide have AAA credit ratings.

    Is there room for improvement? Always. But I’d be hard put to come up with a list of counties that squeeze a penny better than Henrico.

    The fact that one of the bigger opponents is an Aryn Rand admirer bugs me because more than a few of the Tea Party groups also hold her in high esteem.

    These groups – there are dozens and they claim they are unrelated to each other but we know this. there are common threads – commonality – and they all oppose other political groups – even ones that are business conservatives.

    there is a streak of nihilism in these groups and in Ayn Rand’s philosophies. – in my humble view of course. The groups – want to dismantle govt. What does Mr. Gunst want to dismantle?

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