by 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.
