November 26, 2015

A Thought About Thanksgiving

"Rarely has it seemed quite so important to gather together on this Thanksgiving — this most American of holidays.

"In troubled times we crave the solace of friends and family, of warmth and familiarity even more than usual. And when bombs are going off in familiar places, when a second European capital spends days in lockdown, and when a wonderful young man from our own community is gunned down in the streets of Israel’s West Bank, there is no doubting these are troubled times indeed.

"So we cling a little more closely to those we love — whether they are near or not, whether face to face, or face to computer, whether around the table or around the world. They are, after all, at the top of our list of things to be thankful for — that we have made it to this time together, when so many have not. But we hold in our hearts the memory of those who are not with us and weep for families for whom the pain of loss is still so raw."

~ From a Boston Herald Editorial

Souce: Thanksgiving 2015 Editorial, Boston Herald.

November 25, 2015

CAGW Selects Its November 2015 Porker of the Month

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.

Citizens Against Government Waste (CAGW) has selected Rep. Frank Pallone (D-N.J.) their November Porker of the Month "for his absurd attack on government watchdogs who discovered gaping holes in Obamacare’s enrollment verification system."

Here's how CAGW justified awarding Rep. Pallone this dubious honor:

"In 2014, at the request of the House Ways and Means Subcommittee on Oversight, the Government Accountability Office (GAO) began testing the verification system by creating 12 fake identities and attempting to obtain coverage through the federal Exchange.  The GAO published the full results on July 22, 2014, and revealed that 11 of the 12 fake applicants were each able to qualify and receive $2,500 worth of subsidized coverage, even though they had used forged documentation for proof of income or citizenship.  On July 16, 2015, a follow-up GAO investigation found that all 11 fake applicants were automatically re-enrolled for the next year.  Six of the 11 were temporarily cancelled based on new information, but five of those six were able to apply for reinstatement and successfully reacquired their coverage.  Such “secret shopper” investigations are a common practice to test verification systems in order to determine if they are subject to waste and mismanagement.

"After finding these gaping holes in the federal Exchange, GAO released preliminary findings on October 23, 2015, during testimony before the Energy and Commerce Subcommittee on Health, of how 10 new “secret shoppers” were able to obtain coverage in the federal marketplace from New Jersey and North Dakota, and from the California and Kentucky state exchanges.  GAO found that, “although 8 of these 10 fictitious applications failed the initial identity-checking process, all 10 were subsequently approved by the federal Marketplace or the selected state marketplaces.”  Four of the approved fake applicants used Social Security numbers that were never issued, such as ones beginning with “000.”

"While taxpayers and most members of the Energy and Commerce Committee greeted GAO’s efforts with admiration and disgust at the failure of the Obamacare verification system, the committee’s Ranking Member, Frank Pallone (D-N.J.), had the opposite reaction during the October 23 hearing.  His ire toward the GAO investigators themselves was evident when he said, “For you to spend your time and your effort, taxpayer money, in trying to make it more difficult [to get coverage] or trying to highlight the difficulties, I just don’t understand,” he said.  He went on to unfairly smear the investigators as partisan attack dogs and claimed that exposing fraud “is just not a priority.”  Apparently, Rep. Pallone, who is a longstanding member of the Energy and Commerce Committee, has either forgotten or no longer cares that GAO’s mission is “to support the Congress in meeting its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the American people.”  And if he had another or better method to test the accuracy of the verification system, he did not express it at the hearing.

"CAGW President Tom Schatz said, "The GAO should be applauded for their work to expose waste, fraud, and abuse in the federal government.  Rep. Pallone’s shameful attacks are not only false, they are an insult to every taxpayer who expects his or her money to be used wisely and thriftily.  Comments like these are prime examples of why Congress has abysmal approval ratings."

"For his reprehensible and erroneous attack on the investigators who exposed more examples of Obamacare’s vast flaws, CAGW names Rep. Frank Pallone its November 2015 Porker of the Month."

If you're not familiar with Citizens Against Government Waste, CAGW "is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government." Kudos to CAGW for pointing out GAO's role in assisting Congress in conducting oversight and for their continued efforts to fight government waste.

November 24, 2015

Why Its Important to Broaden the U.S. Tax Base

In a paper published by the non-partisan, non-profit  Tax Foundation today, Scott Greenberg, a federal tax analyst,   introduces the subject at the Tax Foundation's Tax Policy blog:

"Over the past few years, politicians in both parties have expressed enthusiasm for lowering federal tax rates. This makes sense: many economists have found that high tax rates hurt economic growth and international competitiveness. Meanwhile, the U.S. levies some of the highest rates in the world on corporations, capital gains, and dividends.

"Lowering federal tax rates would be easy, if it weren’t so expensive: lower rates means less revenue that the federal government is able to collect, leading to a larger budget deficit. Many politicians promise to pay for rate cuts with equally large spending cuts, but these promises seem unrealistic in the current political climate.

"As a result, the only practical way to cut tax rates significantly without increasing the deficit is by broadening the tax base: eliminating tax preferences (such as deductions, exclusions, and other narrow provisions) that reduce federal revenue. These tax preferences are often inefficient, unfair, and complex – which makes “broadening the base and lowering rates” a win-win strategy for tax reform.

"As a general rule, recent tax reform plans have not been nearly imaginative enough in proposing measures to broaden the U.S. tax base. Congressman Dave Camp’s tax reform proposal contained dozens of small base broadening measures, which would only have raised enough revenue for modest rate cuts. Meanwhile, most of the 2016 presidential candidate plans are estimated to cost over $1 trillion – which means that candidates have pursued ambitious rate cuts without proposing equally ambitious base-broadening measures."

Here are the "key findings" from his report (Fiscal Fact No. 492, Options for Broadening the U.S. Tax Base):

  • Broadening the U.S. tax base and using the revenues to lower marginal tax rates remains a sound template for tax reform. Moving to a broader tax base and lower rates would simplify the tax code, remove unfair preferences, and create economic growth.
  • In recent tax reform proposals, policymakers have declined to pursue ambitious base-broadening measures, limiting their ability to cut tax rates.
  • Three promising directions for broadening the U.S. tax base are ending the exclusion of employer-sponsored health insurance, removing the cap on the Social Security payroll tax, and capping itemized deductions at a fixed dollar level.
  • Each of these options would have negative economic effects, if implemented without accompanying rate cuts. However, combined with marginal rate cuts, each would lead to economic growth.
  • Together, all three options would raise enough revenue on a static basis to lower the corporate tax rate to 20 percent, the top rate on ordinary income to 29.5 percent, and the top rate on capital gains and dividends to 13 percent. Doing so would grow the U.S. economy by 6.0 percent over the long term.

Take a few minutes to scan Greenberg's report on broadening the U.S. tax base. It should be useful as you compare presidential candidates' tax plans. And kudos to the Tax Foundation for continuing their mission of improving lives through tax research and education.

November 23, 2015

When the Budget Guidance Misses the Elephant in the Room

Over the weekend, we growled about the budget guidance, which the Arlington County Board provided the Acting County Manager on Thursday for preparing the FY 2017 budget that begins July 1, 2016.

Although we pointed out that the Board's very first budget guidance was to "(p)resent a balanced budget that assumes no increase in tax rates," items 2 through 11 on the Board's list of guidance failed to recognize just how fast Arlington County spending has increased over the period 2001 through 2014. According to Table D-1, General Government Expenditures by Functions, in the Statistical Section of the FY 2010 and FY 2014 Comprehensive Annual Financial Reports (CAFR's), total spending has increased 5.5% annually although annual inflation has averaged about 2.6%.

Let's take a look at how fast spending increased from 2001 through 2014 for those functions:

  • General Government -- 3.9%
  • Public Safety -- 6.0%
  • Public Works/Environmental Services -- 8.4%
  • Health and Welfare -- 2.9%
  • Culture/Recreation --  4.4%
  • Education -- 5.3%
  • Non-Departmental -- 16.5%
  • Debt Service -- 6.2%
  • Regional Contributions, Transit -- 9.0%
  • Regional Contributions, Other -- 3.6%

Let's also look at how the Arlington County Board controlled spending according to inflation and population growth.  Last December, we growled about how increased transparency by the Commonwealh of Virginia seems to have slowed the growth of spending. In their annual report on state spending, the General Assembly's Joint Legislative Audit and Review Commission (JLARC) shows trends in spending when controlled for inflation and population. We did the same with Arlington County's general government expenditures for FY 2001 through FY 2014. Let's take a look:

In 2001, total expenditures were $594.9 million, and population, according to the CAFR's Table K was 189,983, meaning that per capita expenditures came to $3,131. By 2014, total expenditures grew to $1,186 million, and population was 215,000, which means that expenditures per capita was $5,516.

We then adjusted the 2001 per capita expenditures using the Department of Labor's Bureau of Labor Statistics' CPI Inflation Calculator to arrive at an inflation-adjusted expenditures per capita for 2014 of $4,185.32, which multiplied by the 2014 population gives a total expenditures amount for FY 2014 of $899,843,800 when adjusted for inflation and population.

The bottom line is that if the Arlington County Board was truly fiscally responsible -- by limiting county spending to inflation and growth in population -- the County Board would have spent $286,117,581 less in FY 2014 than they did. In other words, Arlington County government would be 31.8% smaller.

So although the Arlington County Board annually shouts to the heavens that it has the lowest real estate tax rate in the region, when real estate assessments shows regular annual growth, the County Board gets a bonus without having to receive any political flak from increasing the real estate tax rate. Not to mention their annual practice of using carryover funds for so-called one-time spending.

Growls readers are encouraged to provide the Arlington County Board their thoughts on FY 2017 budget. Just click-on the link below:

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

And tell them ACTA sent you.

November 22, 2015

Another Reason for a Flat Tax?

"In the matter of taxation, every privilege is an injustice."

~ Voltaire

Source: page 130, "As Certain as Death: Quotations About Taxes," 2010, compiled by Jeffrey L. Yablon,

UPDATE (11/23/15): I just corrected a mispelled "if" to a correct "is." Thanks for a sharp-eyed friend.

November 21, 2015

Your Arlington County Real Estate Taxes to Increase in 2017

At their recessed carryover meeting Thursday evening, November 19, the Arlington County Board set in motion a FY 2017  budget process that will likely increase your real estate taxes by a projected increase of 1.9% to 2.4%, according to the "third bullet" in the county's press release.

Further into the press release, however, we read this:

". . . The County is projecting the overall real estate tax base to rise 2.7%, with residential real estate assessments rising approximately 3%, while commercial assessments are projected to be flat or slightly negative.

"While the commercial vacancy rate has fallen slightly, commercial values continue to be under pressure from vacancy rates, and growing regional competition in the commercial office market. Real estate taxes, which are based on assessments, are the single largest source of revenue for the County."

Your real estate taxes could be much higher, however, if the Board eventually adopts the FY 2017 budget with increases in the real estate tax rate. In the budget guidance adopted Thursday evening, which the Manager will use in preparing the FY 2017 budget, the first thing the Manager is to do is present "a balanced budget that assumes no increase in tax rates," but the Board added "(p)roposed expenditure or service enhancements that are fully offset by fee revenue or by re-allocations are permitted."

The Board's guidance to the Manager for preparing the FY 2017 budget gets more complex after that since there are 10 more specific items to guide the Manager in preparing the FY 2017 budget, which will go into effect on July 1, 2016.

Taxpayers are encouraged to review the Manager's report to the Board since it includes an FY 2017 financial forecast. It is Agenda Item #43 on the Board's recessed carryover meeting agenda. reported on the forthcoming budget guidance in a report on Tuesday by Jennifer Currier. Two items were of specific interest. The first concerns real estate assessments:

"Increases in the real estate assessments for single-family homes, townhouses and condos will provide the county with most of its revenue growth. On average, such assessments are expected to rise 3 percent, causing tax bills for Arlington residents to increase by approximately $175 at current tax rates.

"Assessments for commercial real estate, however, are expected to remain flat or turn slightly negative “due to vacancy rates in office buildings and the slowing demand in multi-family residential.” Commercial property taxes are half of Arlington County’s tax base, and by staying flat or going negative it will “shift the tax burden to the average homeowner.”

The second item of interest involves the county's revenue-sharing with the Arlington Public Schools:

"The county shares 46.5 percent of all local tax revenue with Arlington Public Schools. Given that revenue split, current tax rates, planned one-time outlays and budgetary projections, county government is expected to face a $1-3 million funding gap during FY 2017, while schools may face a deficit of more than $12 million."

Growls readers are encouraged to provide the Arlington County Board their thoughts on FY 2017 budget. Just click-on the link below:

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

And tell them ACTA sent you.

November 20, 2015

Crony Capitalism, Arlington Variety

At its recessed meeting on Tuesday, November 17, the Arlington County Board voted to "invest" $56 million with the hope to receive "dividends from Ballston development," to use a portion of the heading from the Arlington Sun Gazette story posted yesterday.

Here's the overview from the Sun Gazette story:

"Arlington government officials say their planned investment of about $56 million in the redevelopment of Ballston Common Mall will pay off in increased tax revenues throughout the corridor.

"County Board members on Nov. 17 voted unanimously to approve a public-private partnership with Ballston Common’s owner to move forward with a $300-million-plus makeover of the moribund mall.

"The county government’s direct contribution will total about $10 million, with the remainder coming from a bond to be issued by a newly-formed community development authority. Payments on the bond will be made using a share of expected increases in property taxes, sales taxes and meals taxes in the corridor.

"Approval of the specifics is expected in early 2016. If adopted, it will be the first public-private partnership of its kind in Arlington’s history.

"County Board members on Nov. 17 also approved a package of site-plan changes allowing Forest City Enterprises to move forward on its mall renovation."

The Washington Post's Patricia Sullivan provides a more fact-filled report today, including:

"By a vote of 5 to 0, the board voted to allocate $10 million in public revenue for garage and transportation improvements and create a tax increment financing district that would generate an additional $45.5 million.

"It would be the first time the county has tried that strategy, which has been in use across the Commonwealth and the country — including the District — for years.

“This has an enormous potential to be successful,” said J. Walter Tejada (D), the board’s vice chairman. Board Chairman Mary H. Hynes (D) agreed, calling the deal “a measured risk for a great return.”

Forest City, which owns the mall, intends to expand the property with new retail and office space and add a 22-story, 406-unit residential tower. The cost of the project is about $317 million.

Arlington’s $10 million grant would go toward improving the county-owned garage that serves the mall and such projects as rebuilding Wilson Boulevard, removing and rebuilding a pedestrian bridge and improving the streetscape.

"The $45.5 million in tax increment financing would be provided through the use of bonds, which Forest City would repay with the increased tax revenue the mall is expected to generate. If that revenue falls short, the county could impose a special tax to cover the shortage. That financing plan could be formally created early next year, and bonds could be issued by summer."

In his weekly column at yesterday, former County Board GOP candidate Mark Kelly discusses Tax Increment Financing (TIF) in more detail, including:

"The argument for TIFs is that the development being paid for by the TIFs will increase revenue to the County above what we would have otherwise received. Therefore, despite setting aside a portion of that revenue to subsidize development, it is still a net benefit to the taxpayer.

"However, if a private developer cannot secure financing for a project in one of the most attractive real estate markets in the country, why should taxpayers agree to make up the difference?" (emphasis added)

Arlington County will receive "community benefits" from the developer,, Forest City Enterprises, according to the county's press release, which includes even more details than the news reports. Here's what the press release says about the so-called community benefits:

"The developer will comply with the Zoning Ordinance requirement for affordable housing either through a contribution to the County’s Affordable Housing Investment Fund (AHIF) or through the provision of on-site units.  The redevelopment also includes:

  • $1.8 million in site streetscape improvements
  • $106,296 in utility undergrounding fund contribution
  • $75,000 public art fund contribution

"Other benefits include improved $4.8 million in open space access and $4.6 million in connections between the mall and the Ballston area. These newly created spaces – including two plazas and mews — will be open for public use. The developer is also contributing $2.8 million for the pedestrian bridge, $4.7 million for Wilson Boulevard, Glebe Road and Randolph streetscape improvements, and up to $8.9 million in parking garage improvements."

In addition, the FAAC report from County Board's Fiscal Affairs Advisory Commission reports, "the residential buildings planned for the redevelopment will receive a rating of silver from the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) program," a significant added cost for the developer.

The utopians on the County Board's Planning Commission, however, outdid their colleagues on FAAC. In their November 10, 2015 letter concerning the Letter of Intent related to the proposed public-private partnership, the commission chairman wrote (link not available):

"In several ways, Commissioners believe the main risk is that the partnership and the County's effort more generally may not go far enough. The general view is that the substandard streetscape surrounding the Ballston garage, the uninviting garage entrances, and the nature of the Glebe Road today present the County with important opportunities to secure out community's investment . . . Glebe Road needs the immediate attention of County staff, the Transportation Commission, VDOT, and other stakeholders to ensure it presents a humanized and inviting front and not a barrier to the revitalized Ballston Quarter . . . ." (emphasis added)

The Manager's reports to the County Board for the November 17, 2015 Ballston Quarter hearing can be found here, specifically agenda items 41.A. through 41.F. Items 41.A-C. discuss site plan changes; 41.D. involves a vacation; 41.E. involves an easement, but is deferred until the December 2015 Board meeting; and, 41.F. is the Letter of Intent, and contains the financial details of the public-private partnership.

So, let me get this straight. The County Board will plunder county taxpayers so the developer will provide community benefits, including contributions to an affordable housing slush fund, and be able to spend extra to "buy" something called a silver LEED rating. Is life great when you're a county bureaucrat?

Growls readers are encouraged to provide the Arlington County Board their thoughts on what they've wrought on the redevelopment of Ballston Quarter. Just click-on the link below:

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

And tell them ACTA sent you.

November 19, 2015

A Thought on Tyranny and the Bill of Rights

"The Framers believed they had done what they could, through the Constitution, to fend off tyranny by the few and the many.

"Still, the Anti-Federalists were not convinced, and ratification of the Constitution in several states was in jeopardy. Madison and others tried to alleviate the objections. In Federalist 39, Madison argued that the federal government had only "certain enumerated" powers and the states retained "residuary and inviolable sovereignty" over all else. In Federalist 45, he asserted that the proposed federal powers were "few and limited" and the power in the states remained "numerous and indefinite." Nonetheless, Virginia's George Mason, among many others, insisted that more was needed to contain federal authority and safeguard the states' plenary power. In order to secure the Constitution's ratification, the Federalists eventually agreed to introduce a set of amendments in the 1st Congress, which had been widely accepted in advance, further delineating  and underscoring the limits of the federal government respecting its potential abuse against the individual and usurpation of the sttes. They became known as the Bill of Rights."

~ Mark R. Levin

Source: pages 186-187, Ameritopia: The Unmaking of America.

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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