January 25, 2015

A Thought on the Damages Done by Socialism

"Socialism is damaging in many ways. It wrecks economies and batters the quality of life. It corrupts, dehumanizes and makes people worse.

"This isn't partisan rhetoric but a fact confirmed recently by a study that compared people from a communist regime to those from a more capitalist system.

"We find," says a group of international researchers, "that individuals with an East German family background cheat significantly more on an abstract task than those with a West German family background.

"The longer individuals were exposed to socialism, the more likely they were to cheat on our task."

~ Editorial, Investor's Business Daily, August 5, 2014

Source: Editorial, " Socialism Of Progressives Brings Out Worst In People," Investor's Business Daily.

January 24, 2015

VDoT Ignores Auditor's Recommendation to Collect $3 Million

"The Virginia Department of Transportation will not fine a contractor, despite an audit revealing that the state agency could have recovered $3 million." That's the lede of a story posted yesterday (HT Townhall.com) by Kenric Ward, Virginia Bureau Chief of Watchdog.org. Here's further details from Ward's reporting:

“We received legal counsel about past practices limit(ing) an agency’s ability to collect liquidated damages without defining a direct impact to motorists, which did not apply,” said VDOT spokeswoman Marshall Herman.

"She added that the contractor, Serco, “made very clear their strong disagreement about collecting liquidated damages.”

"The Inspector General’s audit, as reported by Watchdog this month, determined the VDOT could have levied $3 million in fines against Serco for failure to perform. The company provides roadside assistance, electronic signage and logistical support for VDOT as part of a $335 million contract."

Mr. Ward's reporting includes the following response offered by your humble scribe:

"Tim Wise, president of the Arlington County Taxpayers Association, said, “If VDOT is unable to collect the liquidated damages from Serco, it seems VDOT needs to learn how to write tighter contract specifications, or VDOT and the governor’s office need to ask the General Assembly to provide state agencies with better tools for contract administration.

“Otherwise, Virginia’s taxpayers and motorists are being taken to the woodshed.”

You can read Kenric Ward's entire story here.

Readers of Growls are urged to contact Governor Terry McAuliffe and/or Senators and Delegates of the Virginia General Assembly who represent Arlington County to express their outrage at how their tax dollars are being handled by the Virginia Department of Transportation bureaucrats.

  • Contact information for members of the General Assembly can be found here (use one of the "quick links").

And tell them ACTA sent you.

January 23, 2015

17.2% Higher USF E-Rate Fee Raised Your Phone Bill

"Porker of the Month is a dubious honor given to lawmakers, government officials, and political candidates who have shown a blatant disregard for the interests of taxpayers."

On December 17, 2014, "Citizens Against Government Waste (CAGW) named Federal Communications Commission (FCC) Chairman Tom Wheeler its December Porker of the Month for taking the FCC on a high-tech holiday spending spree by increasing funding for the Universal Service Fund’s (USF) E-Rate program," according to this CAGW press release.

Here's CAGW's justification for naming FCC Chairman Wheeler its December 2014 Porker of the Month:

"On December 11, 2014, the FCC voted 3-2 to approve the chairman’s proposal to raise the spending cap on the E-Rate program by $1.5 billion annually, resulting in a 17.2 percent increase in the USF fees charged to Americans on their telephone and wireless bills.  The E-Rate program, which provides schools and libraries with discounts on telecommunications and Internet access, is one of four programs funded through the USF.  While it may have a laudable objective, the E-Rate program duplicates private sector efforts to increase broadband access for educational institutions and has become riddled with wasteful spending.  It should be reformed, not expanded. (emphasis added)

"The FCC has complete control over the amount of USF fees and can raise the rates and spending caps at any time. The fees are passed along to consumers in the form of a hidden tax on their telephone and wireless bills. In a December 11, 2014 statement trivializing the economic impact of the higher E-Rate spending cap, Chairman Wheeler said that “…what Americans contribute to the E-Rate fund means that over time, the support paid by consumers could grow by approximately 16 cents a month for a telephone line…over the course of the year that represents one cup of coffee at Dunkin Donuts or one large soda at McDonald’s – per year.”

“Chairman Wheeler’s analysis shows that he is disconnected from reality,” said CAGW President Tom Schatz.  “The approved increase in the E-Rate spending caps does not include any reforms of the program’s burdensome administrative procedures and lengthy application process, nor does it reduce wasteful spending.”

"Some of these reforms were included in CAGW’s book, Telecom Unplugged:  Ushering in a New Digital Era.  FCC Commissioners Michael O’Reilly, Ajit Pai, and Jessica Rosenworcel have all advocated for additional E-Rate program auditing to root out wasteful spending, simplifying the application process, increasing flexibility for schools to choose speeds that best meet their needs, and streamlining the sclerotic administration process.  None of these proposals would cost consumers any more money; yet none have captured the attention of the Chairman.

“Chairman Wheeler has resorted to the usual, hackneyed political rhetoric to justify more hidden taxes and more wasteful spending, using students as convenient props.  On top of his misguided idea that the FCC should subvert state laws that prohibit or restrict taxpayer-funded local municipal broadband systems, Chairman Wheeler is putting a big lump of coal in taxpayers’ Christmas stockings,” added Schatz."

In their conclusion, CAGW wrote, "For imposing higher hidden taxes on consumers; expanding a bloated, mismanaged program; and ignoring commonsense solutions for modernizing and reforming the E-Rate program, CAGW names FCC Chairman Tom Wheeler its December Porker of the Month."

CAGW is a nonpartisan, nonprofit organization "dedicated to eliminating waste, fraud, abuse, and mismanagement in government." Make Citizens Against Government Waste (CAGW) a regular source of information about government spending.

In 2004, Taxpayers for Common Sense provided some history on the USF as well as program waste. For a legal definition of the USF tax law, see here. Rosslyn Smith writes about the use and abuse, including ObamaPhones, of the USF in this 2012 American Thinker article.

Readers of Growls are urged to  contact their members of Congress to express their shock at the 17.2% increase in the Universal Service Fee. Contact information is available at Thomas (use left-hand column). Readers living in Virginia's Arlington County, should contact:

  • Senator Mark Warner (D) -  write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) --   write to him or call (202) 225-4376.

And, tell them ACTA sent you.

UPDATE (1/24/15): Education Week provides a "spotlight on E-Rate" feature that includes an analysis of "the winners and losers in E-rate modernization."

January 22, 2015

A Thought on the Welfare State

"Daniel Patrick Moynihan, a lifelong New Deal liberal and accomplished social scientist, warned that “the issue of welfare is not what it costs those who provide it, but what it costs those who receive it.” As a growing portion of the population succumbs to the entitlement state’s ever-expanding menu of temptations, the costs, (Nicholas) Eberstadt concludes, include a transformation of the nation’s “political culture, sensibilities, and tradition,” the weakening of America’s distinctive “conceptions of self-reliance, personal responsibility, and self-advancement,” and perhaps a “rending of the national fabric.” As a result, “America today does not look exceptional at all.”

~ George Will

Source: His 1/21-22/15 Column, posted at National Review Online.

January 21, 2015

Arlington County's Tax Burden Grows Faster Than Inflation

Per capita income of Arlington County's population grew from $59,010 in 2005 to $86,300 in 2014, or 46.25%, an average of 4.625% annually (page 187, Table K, hardcopy Comprehensive Annual Financial Report (CAFR), page 180 of electronic FY 2014 CAFR). Looked at another way, per capita income in 2014 would have increased to $71,530 if it had grown only as fast as inflation, according to the U.S. Department of Labor's CPI Inflation Calculator (an annual inflation rate averaging 2.09% over those 10 years).

Even if per capita income had increased as fast as the CPI-U index (Table 24, CPI Detailed Report, September 2014), i.e., averaging 2.58% from 2005 to 2014, the $59,010 per capita income would have increased to $74,258 in 2014.

So, workers in Arlington County "did well" in comparison to inflation. But by at least two measures, Arlington County grabbed workers income at an even faster pace than workers' earnings. Let's take a look.

  • Taxes (Table D-2, General Governmental Revenues, page 178, hardcopy CAFR). Per capita taxes grew from $2,980.62 per capita in 2005 to $4,483.47 per capita in 2014, or 50.42%, or an average annual increase of 5.04%. Over the 10 years, local government grabbed between $732 and $879 more than if the Arlington County Board had limited the growth of government to the rate of inflation.
  • General Property Taxes (Table E, General Governmental Tax Revenues by Source, page 179, hardcopy CAFR). Per capita general property taxes grew from $2,180.49 per capita in 2005 to $3,452.35 per capita in 2014, or 58.33%, or an average annual increase of 5.83%. Over the 10 years, our local government grabbed between $708 and $815 more than if the Arlington County Board had limited the growth of government to the rate of inflation.

If you're wondering what the County Board is doing with those extra dollars, take a few minutes to look at Table C on page 174-175 for one possibility (hardcopy CAFR; pages 167-168 electronic CAFR). The table shows fund balances for the past 10 years. One number is of special interest, i.e., "General Fund Balance as Percent of General Fund Expenditures and Other Financing Uses, which cynics might refer to as a slush fund (but see our October 14, 2013 Growls). It rockets upwards from 9.41% in 2005 to 21.16% in 2014, growing in virtually every year. (9.41% in 2005; 12.88% in 2006; 13.49% in 2007;  12.93% in 2008; 14.98% in 2009; 14.40% in 2010; 16.62% in 2011; 19.02% in 2012; 18.44% in 2013; and 21.16% in 2014.)

Growls readers who are Arlington County taxpayers who think their local government in Arlington County should limit the per capita tax burden to no more than inflation and population increases are urged to write or call the Arlington County Board. Just click-on the link below:

  • Call the County Board office at (703) 228-3130.

And tell them ACTA sent you!

January 20, 2015

Auditors Give OK on Arlington Treasurer's Turnover Audit

As most Arlington County residents probably know by now, former Treasurer Frank O'Leary retired last July. As editorialized by the Arlington Sun Gazette on July 15, 2014, "An era truly came to an end July 7, as Arlington Treasurer Frank O’Leary wrapped up his lengthy tenure by submitting his resignation and heading off to retirement." He was first elected in 1983 by a narrow margin.

O'Leary's retirement brought into play §58.1-3136 of the Code of Virginia, which requires audits of treasurers upon termination of office. It reads:

"Notwithstanding any other provision of law, upon the death, resignation, removal, retirement or other termination of a treasurer, an audit of all accounts of his office pertaining to state funds shall be performed by the Auditor of Public Accounts at no cost to the county or city. An audit of all such accounts pertaining to local and other funds shall be performed by the Auditor of Public Accounts or an independent certified public accountant, at the option of the local governing body, and the cost thereof shall be paid by such governing body. Audits not performed by the Auditor of Public Accounts shall be performed according to his specifications and a copy of the audit report shall be filed with the Auditor for his approval."

Two audits were performed as a result of Mr. O'Leary's retirement, and turnover of the office to Carla de la Pava, the newly appointed Treasurer.

The first audit was performed by the Virginia Auditor of Public Accounts (VAPA), which you can find here. The bottom line of the auditor's opinion reads:

"In our opinion, based on our examination, the receipts referred to above present fairly, in all material respects, Commonwealth’s assets of Francis X. O'Leary, Treasurer of the County of Arlington, Virginia turned over to the incoming treasurer at July 3, 2014."

There was a second audit, however, i.e., the "locality portion of the Treasurer’s office," a copy of which was provided to ACTA by the Virginia Auditor of Public Accounts last Fall. The audit was performed by CliftonLarsonAllen, and is dated October 8, 2014. The language of the auditor's opinion closely follows the language in the VAPA's opinion.

Good to learn about the legal compliance with the Code o Virginia.

January 19, 2015

Continuing Comments on Arlington County's FY 2014 CAFR

We've growled once already about Arlington County's FY2014 Comprehensive Annual Financial Report (CAFR), covering the fiscal year ending June 30, 2014 and containing the audited financial statements, which the county released in December, growling about the county's 10-year record of profligacy.

Another item of interest is contained in the independent auditor's Note 2 to the FY 2014 financial statements (page 55 of the hardcopy CAFR; page 53 of the electronic CAFR), labelled "Legal Compliance." In Note 2, the auditor points out in the second paragraph the Arlington County Board may approve "supplemental appropriations" after adopting the original budget in the spring. In fact, such appropriations totaled $127.5 million in FY 2014. The independent auditor also points out, "the County Board can approve transfers of appropriations between County departments and the County Manager can approve budget transfers within a department's appropriation. The level of budgetary control in the County is at the department level."

Of special interest, however, is what the independent auditor writes in the remainder of Note 2's second paragraph. The auditor points out five departments or agencies of Arlington County government whose spending exceeded their budget authority, or "level of control." He identifies such culprits, including the reasons for the overspending:

  • County Manager’s Office -- actual greater than final budget by $31,219 -- "due to leave payouts for employees"
  • Sherriff’s Department --  actual greater than final budget by $742,323 -- "due to overtime costs"
  • Treasurer’s Office -- actual greater than final budget by $207,606 -- "due to increased mailing and printing costs and not achieving vacancy savings"
  • Fire Department -- actual greater than final budget by $611,014 -- "primarily due to overtime and callback costs"
  • County Attorney -- actual greater than final budget by $82,524 -- "due to increased legal costs and expenses related to lawsuits and other transactions the County was involved in during FY 2014."

The five over-budget amounts are small relative to the overall general fund expenditures of almost $1.1 billion. When we growled on October 14, 2013, we pointed out that the county had just "set a new record for the amount of cash in its coffers." More importantly, those over-expenditures may not be looked upon favorably by Arlington County families who are "just getting by" with their personal finances or other more prudent taxpayers.

Growls readers who are Arlington County taxpayers who think their local government should be less profligate are urged to write or call the Arlington County Board. Just click-on the link below:

  • Call the County Board office at (703) 228-3130.

And tell them ACTA sent you!

January 2015
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Items in Growls are written by individual ACTA members and do not necessarily represent the views of the Arlington County Taxpayers Association, Inc. Please send comments about Growls to The Growl Meister