Budget Crunch & Fairfax Taxpayers' Subsidies to the Real Estate Industry
With the slow-down in real estate, which some predict might even involve declining prices for Fairfax County homes, most everyone expects that the County's budget will bet tight next year. Chairman Gerry Connolly has warned the county and school staff that they can no longer count on double-digit tax revenue increases.
A good question is: whether anyone on the staff will take heed of this sound advice? After all, Connolly and his colleagues were largely and wrongly ignored by county staff when the supervisors adopted the program auditor's recommendations to reduce the number of county vehicles directly assigned to employees.
One area where most conservatives and liberals would likely agree is prime for budget cuts is taxpayer subsidies to the real estate business. Most conservatives oppose tax subsidies to business as wasteful and contrary to the concept of a free market. Most liberals tend to believe that tax revenues should be spent on traditional government programs and not on business subsidies.
Fairfax County offers taxpayer subsidies to the real estate industry in two major areas: one is the more than $6.5 million paid to fund the Economic Development Authority's advertising programs to bring more businesses and people to Fairfax County. In most areas of the U.S., businesses pay their own advertising directly or through the chamber of commerce. The second subsidy totals more than $43 million (fiscal 2003-fiscal 2007) for below-cost real estate development and zoning service fees.
The EDA should be defunded for incompetence alone. The EDA argues that bringing more businesses to Fairfax County takes pressure off residential real estate taxes. But the percentage share of county real estate taxes paid by commercial entities has fallen from the high 20s to the upper teens. This shows that campaign contributions mean more than real performance. Moreover, we have more jobs in Fairfax County than we do workers, such that people commute from all over the area to Fairfax County for work. Thus, Fairfax taxpayers are helping to find jobs for non-county residents.
At the very same time, some local businesses argue that we need to pay higher taxes to fund transportation so that all of these non-county residents can commute to and from Fairfax County each day. A very strong argument can be made that most of us, both county and non-county residents alike, would be better off were more of these good paying jobs located outside our area. We'd have less congestion on our roads, less of a need for tax increases, and people residing in the exurbs would have shorter commutes. All of these reasons support the elimination of taxpayer funding of the EDA's advertisements.
Similarly, there are no good public policy reasons for taxpayers to fund below-cost real estate development and zoning services, especially in a tighter budget era. The county argues that, by setting building permit fees slightly below cost, it encourages individuals to obtain county inspection of home projects. OK, but then let's set the rest of the fees at cost. If a party objects to a standard fee, the county could charge at time and materials.
The county also argues that it sets zoning fees below cost because neighboring counties do likewise. But those very same counties also set target proffers at levels that greatly exceed those set by Fairfax County. Indeed, in many areas such as parks and transportation, Fairfax County does NOT even have a target proffer. Thus, it seems that Fairfax County follows its neighbors only when the result is a sweetheart deal for the real estate industry, but ignores the neighbors' practices when they are stronger. We are back to government by campaign contribution.
If budget times are tough, let's eliminate taxpayer subsidies to the real estate industry. But don't hold your breath. We probably won't see relief unless and until the majority of the Fairfax supervisors are turned from office.
A good question is: whether anyone on the staff will take heed of this sound advice? After all, Connolly and his colleagues were largely and wrongly ignored by county staff when the supervisors adopted the program auditor's recommendations to reduce the number of county vehicles directly assigned to employees.
One area where most conservatives and liberals would likely agree is prime for budget cuts is taxpayer subsidies to the real estate business. Most conservatives oppose tax subsidies to business as wasteful and contrary to the concept of a free market. Most liberals tend to believe that tax revenues should be spent on traditional government programs and not on business subsidies.
Fairfax County offers taxpayer subsidies to the real estate industry in two major areas: one is the more than $6.5 million paid to fund the Economic Development Authority's advertising programs to bring more businesses and people to Fairfax County. In most areas of the U.S., businesses pay their own advertising directly or through the chamber of commerce. The second subsidy totals more than $43 million (fiscal 2003-fiscal 2007) for below-cost real estate development and zoning service fees.
The EDA should be defunded for incompetence alone. The EDA argues that bringing more businesses to Fairfax County takes pressure off residential real estate taxes. But the percentage share of county real estate taxes paid by commercial entities has fallen from the high 20s to the upper teens. This shows that campaign contributions mean more than real performance. Moreover, we have more jobs in Fairfax County than we do workers, such that people commute from all over the area to Fairfax County for work. Thus, Fairfax taxpayers are helping to find jobs for non-county residents.
At the very same time, some local businesses argue that we need to pay higher taxes to fund transportation so that all of these non-county residents can commute to and from Fairfax County each day. A very strong argument can be made that most of us, both county and non-county residents alike, would be better off were more of these good paying jobs located outside our area. We'd have less congestion on our roads, less of a need for tax increases, and people residing in the exurbs would have shorter commutes. All of these reasons support the elimination of taxpayer funding of the EDA's advertisements.
Similarly, there are no good public policy reasons for taxpayers to fund below-cost real estate development and zoning services, especially in a tighter budget era. The county argues that, by setting building permit fees slightly below cost, it encourages individuals to obtain county inspection of home projects. OK, but then let's set the rest of the fees at cost. If a party objects to a standard fee, the county could charge at time and materials.
The county also argues that it sets zoning fees below cost because neighboring counties do likewise. But those very same counties also set target proffers at levels that greatly exceed those set by Fairfax County. Indeed, in many areas such as parks and transportation, Fairfax County does NOT even have a target proffer. Thus, it seems that Fairfax County follows its neighbors only when the result is a sweetheart deal for the real estate industry, but ignores the neighbors' practices when they are stronger. We are back to government by campaign contribution.
If budget times are tough, let's eliminate taxpayer subsidies to the real estate industry. But don't hold your breath. We probably won't see relief unless and until the majority of the Fairfax supervisors are turned from office.
posted by Toomanytaxes at 11:35 AM
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