2 Cent Tax Increase Proposal Fails
Summery: The Caroline County Board of Supervisors approved a one cent tax increase this evening, which was little more than an adjustment to their 1 cent tax decrease last year. The initial real estate assessment projection indicated that Real Estate values would go up 1 cent, so to keep their budget revenue neutral, the Board of Supervisors lowered our tax one cent, to 82 cents, in 2016. Unfortunately, the initial assessments were incorrect. Instead of keeping taxes revenue neutral, county residents actually received a 1 cent tax decrease. Tonight’s vote simply corrected that mistake.
However, this 1 cent tax increase (correction) did not come without serious debate amongst our Board Members. This debate was instructive for residents looking to understand the politics of our politics. Below, I will introduce you to each of our Supervisor’s approach and thoughts regarding taxes in Caroline County.
Mr. Floyd Thomas (Mattaponi District): Mr. Thomas pointed out that our County Administrator, Mr. Charles Cully, has done a remarkable job keeping county expenditure low and underestimating revenues. Underestimating revenues is extremely important in budgeting, as we have never spent more on expenses than we took in through revenue. This means that, unlike many other counties, Caroline County enjoys budget surpluses at the end of each fiscal year, as opposed to budget deficits. These budget surpluses allow the county to use left over cash for capital projects, for our schools, and for infrastructure payments that do not require financing more debt.
Mr. Thomas pointed out that if we’re continuously running budget surpluses that there would be no need for a 2 cent tax increase. Mr. Thomas voted against both the 2 cent tax increase proposal and the 1 cent tax release proposal, arguing that we can do everything Mr. Cully’s budget proposes without taking more of the taxpayer’s money. Mr. Thomas believes that our county is still in good shape and reminded the board that he had stayed in touch with the County’s financial advisers. Mr. Thomas also pointed out that many Caroline residents are still struggling from the Great Recession. “When America catches a cold”, he quipped, “rural America gets pneumonia” – yet another reason why raising our taxes as we continue to recover is wrong.
Mr. Clay Forehand (Madison District): Mr. Forehand supported a 2 cent tax increase, arguing that while budget surpluses have been consistent, the amount of those surpluses is on a downward trend. With the budget increasing expenditures by over 3 million dollars, a tax increase would be necessary for continuing to have the financial cushion required to deal with unanticipated needs and crises. Mr. Forehand pointed out that we have a Fire and EMS emergency that must be addressed, that we must find a way to incentivize volunteers and to hire permanent staff, as well as addressing necessary increases in salaries for our school and administrative employees.
Mr. Forehand is looking to the future and pointed out that there are expensive projects that we know are coming in the future and argued for preparing for those expenses now, instead of waiting for them to hit before we react. Mr. Forehand pointed out that the county can no longer leverage future debt. All of our county buildings are currently being used as collateral on current loans (which is pretty scary I must say). Mr. Forehand argued that a 2 cent tax increase would prepare us for the future and would prevent future tax increases down the road. He pointed out that Caroline County doesn’t have a lot of fluff and there are very few areas where we can afford to cut, because there simply isn’t a great deal of wasteful spending in the county. This is most certainly true.
Mr. Forehand also pointed out that, in just 5 years, our primary water system will be 70 thousand gallons short. Mr. Forehand, looking down the road, sees real problems (really expensive problems) that will need to be addressed. Do we want to get ahead of those costs, or do we want sticker shock when they hit us all of a sudden?
Mr. Jeff Sili (Bowling Green District): Mr. Sili approached the issue of tax increases and budgetary spending from the perspective of our county’s propensity to finance its expenditures through debt. We went into debt over the YMCA. We went into debt over the Ladysmith library. If we keep financing projects where much of the real cost occurs down the road, in the interest we pay on that debt, then we’ll never be able to afford to fund the most pressing needs of our county.
Mr. Sili pointed out that if residents are wondering where the money for schools is going, that it is going to pay the interest on our utility debt.
However, Mr. Sili agreed with Supervisor Forehand regarding the crisis facing our Fire and EMS services. He pointed out that last year there were 72 unanswered calls. If you have a fire or a medical emergency and you call 911 for help…72 times that help didn’t arrive last year. We need firefighters and we need to incentivize volunteers. Mr. Sili pointed out that raising taxes on folks on fixed incomes wouldn’t serve their interests and proposed voting for a 1 cent tax correction, as opposed to the 2 cent tax increase.
Mr. Sili also proposed ending county funding for Fred Transit, which hardly anyone in the county is using and which costs the county $102,000 a year. Truly, if ten people are using this service, the rest of us are spending $10,000 a year on their transportation. That simply isn’t fair to the taxpayers. Now, a 2 cent increase in Real Estate taxes would mean a $500,000 increase in projected revenue. A 1 cent increase would mean a $250,000 increase. Cutting funding for Fred Transit would essentially save the taxpayers one half cent in real estate taxes.
Mr. Reggie Underwood (Reedy Church District): (I love his name, don’t you? Sounds like something out of an exciting HBO or Showtime Series). Mr. Underwood argued that it is a “travesty for us to sit here and say that the taxpayers aren’t doing their job” when the county is taking in budget surplus after budget surplus. If the county needs “X” to operate, and takes in “X + $3,000,000”, then the taxpayers are actually doing more than is required. How in the world can we ask for a 2 cent tax increase, when the county is running budget surpluses year after year?
Like Mr. Thomas, Mr. Underwood would prefer to take the $1.5 million set aside for the Ladysmith Road expansion (in preparation for Walmart) and use it to accomplish many of the necessary budget increases proposed in Mr. Cully’s budget. Mr. Underwood pointed out that many of the members on the board ran for office against tax increases and now, here they are, asking for more money. Mr. Underwood agrees that we need more money for our schools, for our bus drivers, for EMS and Fire and servicing vehicles, but argues that these expenses can be paid out of our surpluses, as opposed to being paid out of higher taxes.
Mr. Underwood also opposes incentivizing volunteer firefighters and EMS, when the county cannot control whether or not they show up when they are needed. He proposed spending new money on Fire and EMS by hiring permanent staff accountable to the county. Mr. Underwood concluded by pointing out that just because we are taking in budget surpluses, doesn’t mean that we ought to be increasing our operating expenses; and that we needed to be conservative with the taxpayer’s dollars. Mr. Underwood voted against both the 2 cent tax increase and the 1 cent tax increase.
Vice Chairwoman Nancy Long (Port Royal District): Mrs. Long pointed out that she never ran against tax increases, but ran on spending her constituents money wisely. She pointed out that we were going to need more revenue to hire more firefighters and purchase firetrucks and help the schools and that all of this would require more money. She pointed out that there are many needs across the county and only a limited amount of money to meet them. She also pointed out that many of the businesses, like Walmart and Harris Teeter, are “hoped for” revenue producers. They aren’t here yet. We need to raise the revenue for the projects we know we’re going to have to meet.
If these great revenue generating businesses do finally show up, then great, but until then we need to act on the basis of what “is” and not just what is “hoped for”. Mrs. Long was the one who pointed out that a 2 cent tax increase would only generate $500,000 for the county and that if we want to be able to finance future projects then we are going to need to get a credit rating and be worthy of future loans. This requires a cushion of cash on hand and a demonstration that Caroline County is fiscally sound. She supported the 2 cent tax increase proposal.
Chairman Jeff Black (Western Caroline District): Mr. Black took us through the history of Caroline County tax increases. In 2010, we were paying 53 cents in Real Estate taxes. In 2012 it went up to 68 cents. In 2013 it went up to 72 cents. In 2014, due to a bond referendum aimed at financing our schools and a new county radio system, it jumped 11 cents to 83 cents. Last year, we lowered the rate to 82 cents. Mr. Black also took us through some of the math related to financing future debt, depending on the savings held by the county. I will admit that I am not as proficient as he is in the math and I will not butcher his brilliance in public in order to emphasis that fact.
His point was, that we cannot continue, as a county, to finance our needs with debt. All that money we pay on the county debt and utility debt is money that isn’t being spent on raises for bus drivers, on raises for school teachers, on necessary infrastructure and schools. It is “insane”, he argued, to waste so much of the taxpayers money on interest on the debt, when we can use revenue surpluses to pay for our needs in cash. Mr. Black’s philosophy seems to be a responsible “pay as you go” approach. For this reason, Mr. Black supported the 2 cent tax increase. Mr. Black also pointed out that our surpluses ought to be put in perspective. Yes, revenues have gone up; but so have our expenses. Caroline County was spending 39 Million Dollars in 2012, but is spending 49 Million dollars today.
My Thoughts: I completely agree with Mr. Forehand, Mr. Black, and Mrs. Long that we need to stay ahead of future expenses and that we need more revenue to do it. I agree that we don’t have the business base that we need to grow the revenue to where we need it to be to cover the expenses coming down the road. I agree that a 2 cent tax increase is reasonable (really it’s only a one cent tax increase). However, I wanted them to know that if they raise taxes 2 cents, that Caroline County residents would expect to see some demonstrable benefits from our increased investment in our local government. Mr. Black addressed those concerns, explaining where that money would go and why it was so important for it to go there. In future years, we may well be hit with massive tax increases because we didn’t prepare today for things we already knew we would face in the future.
That said, I very much agree with Mr. Sili’s proposal for a one cent tax increase, fixing last years mistake and keeping revenue neutral over the long haul. The economy is improving and Mr. Thomas and Mr. Underwood were 100% correct that we are running surpluses. However, I agree with Mr. Sili’s approach to spending those surpluses on capital projects for our schools and infrastructure that will prepare the way for future business, lowering our dependency on debt. Mr. Thomas and Mr. Underwood seem far more comfortable with financing our needs on a maxed out credit card.
I would like to thank Mr. Thomas and Mr. Underwood for sticking up for the taxpayers and recognizing that we’re already paying our fair share. For folks who follow national politics, take your national political cap off for a second and consider this. Two Democrat Supervisors opposed tax increases. It kind of made my head spin. I liked it. Mr. Underwood demanding that the county take a more conservative approach to spending the taxpayers dollars made me smile. Mr. Underwood calling it ludicrous to demand tax increases while the county was running surpluses made my night. I think Mr. Thomas and Mr. Underwood are secretly Republicans and I would like to hold secret meetings with them to further encourage their political conversions (we just need to teach them a healthy hatred for debt and we’re good to go). Other Democrats looking to attend my secret meetings, I’ll be out in the community. We’ll have a secret handshake and everything. It’ll be awesome!
I will try to get a full analysis of the County Budget out to you this week. Mr. Cully’s budget is more aggressive than the one we saw last year, so there is much more to evaluate. You may have a greater appreciation for Supervisors Black, Forehand, and Long after you look at the expenses we’re facing in the future.
Final Vote to raise Real Estate taxes 1 cent and Water Rates 2%:
Nays: Mr. Underwood and Mr. Thomas.
Yeas: Mr. Sili, Mr. Black, Mr. Forehand, and Mrs. Long.