" " Vote No Fairfax Meals Tax

The Fairfax County Meals Tax: A Band-Aid, Not a Solution

The Nov. 8 Fairfax County ballot has a proposal to increase the tax on convenience and restaurant food from 6% to 10% to "[reduce] dependence on real estate taxes."  However, the "meals tax" will not reduce annual real estate tax hikes. It will not end school budget crises.  It will not even pay for next year's school and county raises.

It will however impose a new administrative burden on small business and divert $99M, enough for 2,000 $50K jobs, from the private sector to government.

Tax relief is overdue.  Since 2000 Fairfax County residential real estate taxes have increased faster than household income (slide 1).  County and school spending have increased five times faster than population and enrollment (slides 2 and 3).  Moreover, the county already has a diverse revenue base of over 100 taxes and fees.

Fairfax County real estate taxes have increased faster than household income since 2000 Fairfax County government spending has increased 5 times faster than county population since 2000 Fairfax County Public Schools spending has increased 5 times faster than enrollment since 2000
But here's why the meals tax will not provide the real estate tax relief touted by meals tax supporters:
Fairfax County cannot be trusted (more ...)
School Superintendent (more ...)
The school superintendent has stated (here and here and repeated here) that since FY2008 the school budget was cut by over $400M and 2175 positions. In fact the school budget increased by $487M (from $2144M to $2631M) and 1566 positions (from 22,261 to 23,827).
County Executive (more ...)
In his Fiscal Year 2017 budget presentation, the County Executive stated that since FY2009, the county (non-school) budget had been cut by $300M and 700 positions. In fact the county budget increased by $328M (from $1571M to $1899M in FY2016) and 284 positions (from 12,101 to 12,385 in FY2016).
Meals Tax Task Force (more ...)
The Fairfax County 2014 Meals Tax Task Force Report, in the section giving reasons for a meals tax referendum, says that the county needs more revenue due to growing population and enrollment, that schools are underfunded, and human services have been cut. What is not said is that since FY2000 both school and county spending increased five times faster than enrollment, population, and inflation (slides 2 and 3, above).
Meals Tax Pamphlet (more ...)
The county's Meals Tax Referendum Pamphlet states that 70% of meals tax revenues would go to schools and 30% to the county. It suggests that the county portion would be used for capital improvements, such as the renovation and construction of schools, fire and police stations, and libraries. However, it may instead be spent on raises, pensions, and Cadillac health plans. At the 2014 Fairfax County Meals Tax Task Force, the Fairfax County Police Pay and Benefits Committee submitted a report urging that meals tax revenue be used for compensation.

A June 5 Fairfax County Taxpayers Alliance email to the Fairfax County Office of Public Affairs asked, "... how much of the meals tax revenues would be used for raises and benefits?" The June 6 reply cited the 70/30 allocation between the schools and county and stated, "More specific uses will be dependent on what is funded in the FY 2018 budget if the referendum passes." Therefore, there is no commitment to spend the county's portion of the meals tax on capital improvements. It could be spent on raises and benefits, which is not mentioned in the pamphlet.
A State Senator (more ...)
On June 27, 2016, the Democrat state senator from the 31st district sent an email saying that the meals tax would "... reduce class sizes, hire more teachers, and even bolster our public safety, improve our parks and libraries, support local arts and more ..." When asked how many teachers would be hired and by how much would class sizes be reduced, the senator did not reply. The same question was asked of the school board chairman, who also failed to reply.

When asked, the schools' Office of Community Relations replied, "There are no responsive documents for this request. The School Board will discuss the specific uses of potential revenue from the meals tax as part of their regularly scheduled meetings and work sessions." Therefore there is no commitment to use the meals tax to reduce class size. The revenues could be spent on raises and benefits, which was not mentioned in the Senator's email.
Fairfax County residential real estate taxes are increasing faster than household income (more ...)
The first graph at the top of this page shows that since 2000 Fairfax County real estate taxes for the typical homeowner have increased 154% (from $2400 to $6100) while household income increased about 40% (estimated, since the last available numbers are for 2014). As Supervisor Hudgins acknowledges, these increases are unsustainable. The Supervisors should be reining in spending rather than creating new taxes.

Raises and benefits are the drivers of tax increases. In fact, revenues from real estate tax increases since FY2000 have not been enough to pay raises and the increasing cost of pensions and health insurance, which is why services were cut and class sizes increased.
Sales Tax (more ...)
The Virginia sales tax was set at 4 1/2% in 1986. In 2004 it increased to 5%. In 2013 it increased again, from 5% to 6% for localities in Northern Virginia and Hampton Roads and 5.3% for the rest of the state.
Dulles Toll Road (more ...)
Round-trip tolls on the Dulles Toll Road increased from $1.50 in 2005 to $7 in 2014, which for daily commuters was a $1300 annual cost increase. In 2019 round-trip tolls are projected to increase by another $2.50, which would be another $600 annual increase. The toll hikes pay for the construction of the Silver Line, which cost $11 billion ($6 billion construction cost and $5 billion interest). Landowners, who are making billions from increased property values, are paying $1 billion and commuters and taxpayers are paying $10 billion.
I66 Tolls (more ...)
Starting in 2017, round-trip commuters on I66 inside the Beltway will have to pay tolls of $12 to $17 per day ($3000 to $4000 annually). In addition, as-yet unspecified tolls will be charged to use new HOV lanes to be built outside the Beltway. This is because state income tax revenues are siphoned off by public education and Medicaid, whose budgets historically have grown much faster than enrollment, population, and inflation and whose services are mediocre. According to the 2015 ACT college admissions test, only 41% of Virginia high school seniors were prepared for college.
Business Taxes (more ...)
The Fairfax County Economic Development Authority fact sheet on taxes owed by Fairfax County businesses is five pages long. To attract employers, Fairfax County should eliminate taxes, such as the BPOL (Business/Professional/Occupational Licenses) tax, instead of adding a new tax.
Even with a meals tax, real estate taxes will continue increasing faster than household income (more ...)
The county's meals tax pamphlet states that the meals tax will increase revenues by $99 million.

This will not even pay for one year's compensation increases.

County and school compensation increases (raises and the increased cost of benefits) totaled $112M last year (FY2016), $133M this year (FY2017), and are projected to cost $198M next year (FY2018).  Next year's projected school budget does not propose using the meals tax to reduce class size.

In the years following the meals tax, annual budget crises, service cuts, and 5.5% real estate tax increases will continue in order to pay for across-the-board 3.5% raises, pensions with retirement at 55, and Cadillac health plans for 34,000+ county and school employees.

The Fairfax County Board of Supervisors and School Board are ignoring the causes of tax increases (more ...)
Raises (more ...)
The biggest single annual cost increase is for 3.5% across-the-board raises, with little regard to performance. For example in this year's budget (FY2017) raises accounted for $36M of the county's $78M spending increase, and accounted for $62M of the school system's $110M spending increase.

County and school compensation is generous. Between FY2000 and FY2016 the average annual raise for all county and school employees was about 4%. Pensions allow retirement at age 55 with 75% of salary, and employees have Cadillac health insurance. For the 2015-2016 school year, Fairfax County Public Schools reviewed 15,102 applications for 1,477 teacher job openings. In 2015 the county had 139,618 applicants for 2,601 job openings.

It is too expensive to pay all employees the premium required to retain the best employees. The Fairfax County Board of Supervisors and School Board should use bonuses or merit pay to attract and retain the best employees.

Pensions (more ...)
Local and state governments nationwide have large unfunded pension liabilities. To fund these liabilities, Fairfax county and school spending on pensions has increased nearly $400 million since FY2000 (from $145M to $545M), which is $290 million more than needed to keep up with inflation, population, and enrollment. Retirement age needs to be increased or pensions replaced by defined-contribution plans, as has happened in the private sector. Many such changes would have to be approved by the Virginia General Assembly.
Health Insurance (more ...)
Similarly Fairfax county and school spending on health insurance has increased about $265 million since FY2000 (from $80M to $345M), which is $205M more than needed to keep up with inflation, population, and enrollment. Like the private sector, the county and schools should switch to high-deductible insurance plans with Health Savings Accounts or have employees switch to Obamacare plans, which the government employee unions supported.

In FY2000 benefits were 27% of salary; now they are 46% of salary.

School Administration (more ...)
Of the 24,000 Fairfax County Public School employees, only 9,000 are regular classroom teachers. There are an additional 3,000 special education teachers. The anti-phonics, anti-drill-in-arithmetic, dumbed-down social studies, atheistic curriculum increases remedial and disciplinary costs, perhaps by hundreds of millions. Fairfax County Public Schools has a thirty-year record of failure in teaching the increasing numbers of low-income students. Overall the 2015 Fairfax County Public Schools ACT college admissions test results showed that only 59% of the 4900 students tested were prepared for college. The percent prepared varied by high school from 98% for Thomas Jefferson and 75% for McLean to 20% for Mt. Vernon. This is after 16 years during which spending increased five times faster than enrollment. The curriculum needs improvement, which requires competition.
Public Safety (more ...)
The police state that the meals tax is needed to compete with other law enforcement agencies for the small pool of recruits. The pool is small because 70% of police applicants fail the background check. This is despite the school board's self-proclaimed mission to "inspire" and "empower" students to " ...lead healthy, ethical lives [and] and be responsible and innovative global citizens." It is an indictment of society's atheistic approach to values. Moral values are inseparable from reliance on and accountability to God.
Family Breakdown (more ...)
Of the county's $1.9B of non-school spending, perhaps $400M is spent on public safety and social services dealing with family breakdown and poverty. Why are marriage and family collapsing? Perhaps President Obama said it best when he stated that the United States is no longer just a Christian nation. Social service and public safety costs need to be reined in by restoring the ideal of marriage and child-rearing that was lost when the Supreme Court decisions of the 1960s removed the Bible, Ten Commandments, and the Lord's Prayer from government settings, including schools. These decisions reflected society's view that the Ten Commandments had become optional. We now have half a century of evidence that they are not optional and that the Court needs to reverse these ideologically motivated decisions.