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Coming to Your Town: Tax Hikesby
Peter J. Sepp, Jeff Dircksen Oct 30, 2002 Even as the threats of war and economic uncertainty seemingly
occupy the minds of voters, many pundits insist that this fall’s elections
will center on local issues. When it comes to the taxes, one local battle
with national implications is being fought right in big government’s
backyard.
A November referendum in the northern Virginia suburbs
around Washington, DC asks voters to support a ½-cent sales tax increase
(and a full cent in the Hampton Roads area), in order to fund transportation
improvements for part of the gridlocked region.
Supporters like Virginia Governor Mark Warner (D) and
U.S. Senator John Warner (R) say their campaign, if successful, could become
an option for other communities that seek funding solutions to their infrastructure
problems. Unfortunately, what’s old is what’s new. Here are the
familiar warning signs that voters everywhere should recognize:
Shell Game.
The two Warners insist that funds raised by the referendum will be “earmarked” for transportation, even though the “earmarked” ½-cent
voters approved back in 1986 has already been squandered. Last year, the Virginia
Legislature transferred $317 million in “dedicated” transportation
money into the General Fund and filled the Transportation Fund with $317 million
in IOUs.
The pro-taxers now propose neutral “Accountability
Committees” to oversee the “Regional Transportation Authority” and make sure funds are spent in the areas where they’re raised. Yet,
2 of each Committee’s 3 members have been hand-picked by Governor Warner.
Across the nation, funds from the states’ tobacco lawsuit – originally intended to “compensate taxpayers” – have been eyed for everything from sidewalks to flood control projects.
These free-for-alls prove that if politicians have the money, they’ll
spend it however they choose.
Guilt Trip.
Big-government boosters blame reductions in the state’s personal property
tax on automobiles for unmet “budget needs”. In fact, current
Virginia revenue projections are bigger than what budget officials
thought they would be back in December 1996, before taxes were cut.
So what’s the culprit? Try Virginia’s spending, which, even accounting
for inflation, grew 18% between 1998 and 2002.
Despite some reductions in certain tax rates, overall
state revenues still took a slightly larger share of Americans’ incomes
in the year 2000 than they did in 1990. During that same period, spending
rose at an even faster clip, leading to the deficits now plaguing state budgets.
The notable exceptions are states like Colorado, whose constitution limits
taxes and spending to the rate of inflation plus population growth and normally
refunds the difference to taxpayers.
Bait and Switch. For all its bluster, the referendum’s language can’t guarantee
the construction of one single project, and it can’t compel transportation
officials to follow even the vague “corridor” plans outlined in
the proposal.
Politically-loaded processes like these can often lead
to boondoggles, not boons to the community. No wonder a recent study from
the Surface Transportation Policy Project chided Virginia’s proposal
for raising “more questions than it answers.”
Numbers Racket. Initially, Warner & Co. claimed that an end to the transportation
“crisis” was just one more tax hike away. More recently, they’ve
been forced to acknowledge that the 1/2-cent boost would be just “a
down payment.”
Virginia, like other states,
doesn’t need another tax hike to deal with transportation problems. The solution is to reexamine funding formulas, stop building roads to nowhere,
slow the growth of overall state spending, encourage private user-funded roads,
and contract out services to obtain the best values for taxpayers’ dollars.
So far, many elected officials haven’t gotten this
message. The latest example is Missouri, where voters trounced a sales/gas
tax hike in July by a 72.5%-27.5% margin – despite being bombarded by
a pro-tax propaganda campaign with a $3.5 million budget.
Now, the northern Virginia referendum contest remains
tight, even after pro-tax spinmeisters have desperately outspent opponents
by 10 to 1. Regardless of the outcome on November 5th, one thing
is certain: taxpaying voters should beware if Virginia’s “road
show” comes to a town near them.
Pete Sepp is Vice President for Communications with the Alexandria,
VA-based National Taxpayers Union (NTU), a 335,000-member citizen
group that supports lower taxes, less wasteful spending, and accountable
government at all levels. Jeff Dircksen is a Policy Analyst
for NTU. |
