Watchdog of the Taxpayer's Dollar Since 1956 Fairfax VA

The FAIRFAX COUNTY TAXPAYERS ALLIANCE Home Email Alerts FORUM Press Releases Trend Graphs Bulletins Testimony Feb. 10, 2007 media@fcta.org TAXPAYER ALERT Contact:  Arthur G. Purves 703-674-9519

The Fairfax County Taxpayers Alliance (FCTA) urges voters to ask their state delegates and senators to fund transportation from the General Fund surplus and not from more tax hikes. This is important as Senator Chichester's Senate Finance Committee is poised to add more taxes to the House of Delegates transportation bill (HB 3202), which already has unacceptable increases in taxes and fees.

To contact your legislator, visit www.fcta.org and click on this link: Identify your state senator and delegate and send them a message.

Fairfax County residents have been hit hard by real estate tax increases. Since 2000, real estate taxes for the typical Fairfax County homeowner have doubled, from about $2400 to $4800. Over that period, the supervisors raised real estate taxes an average of ten percent per year.

In 2004, the General Assembly enacted a $1.4 billion tax hike and did not allocate a penny of that to transportation.

Republican legislators should heed the Fairfax County Republican Committee, which last summer voted overwhelmingly to adopt a resolution opposing higher taxes and fees for transportation.

Supporting tax hikes will not reverse the red-to-blue momentum in Virginia. Instead Republicans risk becoming, like the Democrats, the party of higher taxes. Few grass-roots Republicans will rally behind Republican legislators that support tax hikes.

In a recent email, Attorney General Bob McDonnell stated that over the last decade, state spending has increased six percent per year, which is double the increase in inflation and population. He also states that during the most recent two-year budget cycle alone, the General Assembly increased funding for

An FCTA analysis shows that while Virginia transportation spending has trailed population growth, spending for K-12 education has increased ten times faster than enrollment -- even after adjusting for inflation. (See graphs.)

The Virginia budget is split into two almost-equal parts: the General Fund and the Non-General Fund. Traditionally, education, welfare, and public safety have been funded from the General Fund, which derives its revenue from fast-growing income taxes, sales taxes, taxes on insurance premiums, and lottery and ABC profits. The Non-General Fund, which has traditionally funded transportation, generates its revenues from taxes and fees earmarked for specific purposes. Taxes earmarked for transportation include mainly state and federal gasoline taxes but also sales taxes on car purchases, car titling and registration fees, and ten percent of general sales taxes.

The problem is that General-Fund taxes grow with the economy and have allowed school and welfare spending to soar. However, Non-General-Fund gasoline-tax revenues are stagnant since they are 36 cents on the gallon and do not increase with the cost of gasoline. In fact when the cost of gasoline increases, people buy more fuel-efficient cars and actually buy less gasoline, thus depressing gasoline-tax revenues. The result is a structural imbalance that has enabled education and welfare spending to increase far faster than enrollment and population, while transportation spending has trailed population growth.

General Fund tax revenues have exceeded projections. The Fiscal Year (FY) 2004 General Fund surplus was $324 million. The surplus for FY2005 and FY2006 was $2 billion, in addition to the $1.4 billion tax hike. The estimated surplus for the current fiscal year is $330 million.

The General Assembly is making no effort to restrain General Fund spending. What better way to bring discipline to the General Fund than to have school and welfare spending compete with transportation for General-Fund surpluses? This would correct the structural imbalance where school and welfare funding come from fast-growing income and sales taxes while transportation is tied to stagnant fuel-tax revenues.

However, the education establishment does not want to share General Fund revenues with transportation. It finds an ally in Republican state senator John Chichester, chairman of the Senate Finance Committee. Last year, Senator Chichester successfully blocked an attempt by the House of Delegates to spend $700 million of the General Fund surplus on transportation.

While this year's House of Delegates transportation bill does allocate substantial General Fund revenues to transportation, the bill still has some onerous features:

The House bill also raises car registration fees, fees on heavy trucks, the tax on diesel fuel, fines for speeding tickets, car rental taxes, and fees for driver's licenses.