Friday, March 12, 2010

Budget "Cut" Bills Start to Come Due

I have written several times over the last couple weeks that the press continues to frame the proposed budget reductions here in Richmond as "cuts" when in fact these actions are really just a means of transferring responsibilities from the state government to local governments and individuals.
The results of our actions are now starting to play out as local governments start to adopt their budget. Northern Virginia localities have proposed the following tax increases:


Current Tax Rate

Maximum Advertised New Tax Rate

Percent Increase

Assessed Values






Fairfax County





Arlington County





Fairfax City





Falls Church









Prince William




* Hasn't been voted yet, but is proposed by City Manager.

Obviously, part of these tax increases are due to assessed property values decreasing, but if the state had not cut its school funding by $700 million this year, all Northern Virginia jursdictions were slated to get new monies from the state in-part due to declining assessments - instead Northern Virginia taxpayers are footing the bill through higher real estate taxes.

None of this also captures what goes on in the private sector which is much harder to measure. For example, when the state cuts Medicaid reimbursements to health care providers, they often raise prices on their non-Medicaid patients - driving up private health insurance costs with are either paid by taxpayers directly, result in lower wages, or lost jobs. Alternatively, when the state restricts Medicaid waivers (so people can be cared for at home instead of in a facility), families have to pay the costs or sometimes leave work to care for someone in need.

State reductions in higher education funding result in families paying higher tuitions. Virginia's colleges are already signalling major tuition increases for next year.

While many in the General Assembly are already taking credit for making "tough decisions" and not raising taxes in a recession, the end result is to push the tough decisions to our local governments, businesses and families who have to deal with the consequences. Kids need to go to school, people are still going to get sick, criminals will commit crimes, and our mentally ill need care.

These expenses are not going away - different people are just going to end up paying them. In many cases, people are going to end up paying who cannot afford them. One reason we have government is because its is more efficient and equitable for us to share certain expenses as a group instead of making individuals bear the cost of everything. This budget is a big step backwards and the bills are starting to come due.

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