Tag Archives: Henrico meals tax

I wrote this op-ed for the Times-Dispatch, which published it this morning. JAB

As an 11-year resident, I long deemed Henrico County a well-run locality. It has the lowest property tax rate among Virginia’s largest counties yet maintains an AAA bond rating. Its employees are helpful and courteous, and its schools are reasonably well regarded. But I have begun to change my appraisal since county officials began pushing for a 4 percent meals tax, to be put to a referendum this fall. I feel less like a citizen of Henrico and more like a subject.

I understand that the county faces challenges coping with teacher pensions and environmental regulations, and I acknowledge that the board has cut spending significantly since the 2007 recession. But I view those difficulties as a prompt to start thinking more creatively and analytically about how to provide core services.

Does Henrico really need to operate a public golf course? (There are more than 30 courses in the Richmond-Petersburg area.) Does the county really need to film feature stories for its own public-access channel? How aggressively are county officials implementing “smart city” technologies to drive down costs and improve responsiveness? Henrico was an early adopter of integrating PCs into the classroom — why isn’t it leading the way in integrating online learning into the curricula? Finally, why isn’t the county doing more to encourage mixed-use development in places such as Innsbrook to generate more tax revenue?

I have long been dubious about higher taxes. What pushed me over the edge, however, was the publication of an expensive website and video, www.henricomealstaxfacts.com. The website cost $20,250 in county funds, and that doesn’t include direct mail, posters and utility bill inserts for the rest of what a county spokesman describes as a “purely informational” campaign. The supposed intent is to educate Henrico taxpayers about the meals tax so they can make an informed judgment this fall.

State law forbids localities from using taxpayer dollars to sway voters: “The materials or advertisements shall not advocate the passage or defeat of the referendum question.” The county website does not come right out and say, “Vote for the Henrico Meals Tax.” But it does everything short of that by providing selective information.

We read on the website, for instance, that after cutting $115 million from its budget, “the county cannot make more spending reductions without significantly impacting Henrico Schools and Public Safety.” In a video interview, County Manager John Vithoulkas reiterates, “If we make a turn now, then as a county, I believe, we can miss that fiscal iceberg. … If the meals tax fails, the reality is, then, there are two choices: We are looking at a 6 cent real estate tax increase or service level reductions.”

What neither Vithoulkas nor the website bothers to inform Henrico residents, however, is that a surge in property values this year will create a revenue gusher next year. In its FY 2014 budget, the county forecast that property tax revenues would increase only 2 percent in FY 2015 and 2016. Such a conservative assumption may have been warranted at the time, but the market has shifted. Read more.

Have Henrico County officials violated the Code of Virginia by publishing a website supporting a 4% meals tax scheduled for a referendum this fall? That all depends on where you draw the line between “information” and “advocacy.”

I raised the issue yesterday in a blog post (“County Paid Propaganda?”) that took note of the newly posted website and video, which, according to the Times-Dispatch, had cost $20,250 to produce. The video had cuts from interviews with County Manager John Vithoulkas and School Superintendent Pat Russo justifying the tax increase.

I frowned on the idea of the county using taxpayer dollars to advocate an increase in taxes. What I could not say for certain was that the website had been paid for by the county.

Today, I can say that the county did pay for the website. Steven Knockemus, assistant director, public relations & media services, confirmed that the expenditure was approved by the county manager as part of a larger informational campaign. Henrico plans to complement the website with direct mail, posters and utility bill inserts.

The materials are purely informational, says Knockemus. “This is strictly information for the electorate to develop an informed opinion.”

The Virginia state code states:

Nothing in this section shall be construed to limit a county, city or town from disseminating other neutral materials or advertisements concerning issues of public concern that are the subject of a referendum; however, the materials or advertisements shall not advocate the passage or defeat of the referendum question.

But is the website purely informational? I think it crosses the line into advocacy. Basically, it states the case for the new tax without expressing any of the objections to it.

We learn, for instance, that Henrico has cut $115 million and 646 positions from its budget since the recession. Those are facts. We also learn that a meals tax would raise approximately $18 million. That’s not a fact but an estimate. Then we learn that 40% of the meals tax will be paid for by non-residents. That’s a guesstimate based upon a variety of assumptions, which may or may not be accurate.

Then there’s this:

Q. Why not consider making reductions in spending instead of implementing a meals tax?
A. After cutting $115 million from its budget over the past four years, the county cannot make more spending reductions without significantly impacting Henrico Schools and Public Safety, which account for more the 75% of the county budget.

That’s not a fact, an estimate or guesstimate. That’s a political conclusion and flat-out advocacy.

One more example, a quote from Vithoulkas on the video:

If we make a turn, if we make a turn now, then as a county, I believe, we can miss that fiscal iceberg that’s out there. If the meals tax fails, the reality is, then, there are two choices:  We are looking at a six-cent real estate tax increase or service level reductions.

Again, that’s not a neutral statement, that’s a political conclusion.

Vithoulkas is presenting voters with a false choice, contends Sidney Gunst, who has led the charge against the meals tax. (Full disclosure: Sidney is a personal friend)

The county can’t cut any more spending? Really? How about selling excess property and other assets — like the county golf course? How about shutting down the public-access channel, which has at least eight employees? Why doesn’t the county have a charge-back to insurance companies for emergency medical services, a measure that Gunst estimates could save $7 million annually if half or more paid up?

The county needs more revenue? Real estate values are on the rise. With no adjustment to the property tax rate, a 10% increase in assessment would yield the county about $25 million in revenue. Meanwhile, other jurisdictions around the world are embracing the “smart city” movement and adopting cost-cutting technology. Here in Virginia, innovative business enterprises are showing local school systems how to integrate online learning into K-12 teaching. Why aren’t those innovative ideas even part of the dialogue in Henrico?

None of Gunst’s alternatives to raising taxes are mentioned on the Henrico website. The county is not telling citizens that there are two sides to the story. It is presenting only one side, and in my book that’s pure advocacy.

“I don’t know if the website is legal or not, but it smells,” Gunst says. Bob McDonnell defended his failure to report gifts and loans by arguing that he stuck with the letter of the law. “What the governor did may be legal, but it smells,” Gunst says. “Legal or not, [the website] stinks.”

by James A. Bacon

Henrico County has launched a website to tout a 4% meals tax proposal that voters will accept or reject in a referendum this fall. With slick graphics and professionally produced video, Henrico County Meals Tax Facts, created by the West Cary Group ad agency, cost $20,250, reports the Times-Dispatch today.

The website contends that the tax will raise $18 million yearly, of which 40% will be paid by non-Henrico residents. In the video County Manager John Vithoulkas and School Superintendent Pat Russo describe the fiscal challenges facing the county and the spending reductions already made.  “If the meals tax fails,” says Vithoulkas, “the reality is then two choices: We are looking at a 6-cent real estate tax increase or service level deductions.”

Well, that’s one side of the story…

The website bears the county seal of Henrico, a Henrico County government post office address, and a Henrico County email address. “Henrico County staff is available to meet with your group or organization about the meals tax referendum,” states the contact page.

The website and the Times-Dispatch article leave unanswered one very important question: Did Henrico County also pay for the website production? It appears that it did. Typically, if an outside group had paid for it, that group would identify itself. But no such group is noted.

As a Henrico resident opposed to the meals tax, I have a big problem with the county spending tax dollars to persuade citizens to raise taxes on themselves. It’s fine for the County Supervisors who approved the referendum to get out front and make the case to the public — on their own dime. It’s fine for pro-tax advocates to tap  business groups, teachers unions or other private interests to raise the money to make their case. It’s even fine for Vithoulkas and Russo to attend community events and present their analysis. But I have a very big problem with county governments using tax dollars to propagandize for higher taxes.

If that is what, in fact, occurred, it is outrageous. It might even be illegal. Perhaps Bacon’s Rebellion readers know if such an expenditure violates state statutes. (If doesn’t, it should.)

Before going thermonuclear, however, I await a response from county officials as to who paid for the website. I sent an email Saturday and will follow up with a telephone call tomorrow. I will keep readers posted.