Tuesday, October 17, 2006

Tax! You're It.

A sharp dose of economic reality came from an unlikely source this week - County Executive Janet Owens. According to the Queen, the next County Executive will "absolutely" have to increase taxes to deal with the County's increasing backlog of expenses.

Why, oh why, would Ms. Owens toss this little grenade into the mix three weeks before the November 7th election. Some might suggest it was to give Mr. Leopold and Mr. Johnson fair warning about what they are about to get themselves in to. I'm too cynical for that. I suspect this was one last (?) present lobbed at George Johnson from the only County Executive of the last 6 who didn't endorse him last week. I think Ms. Owens knew that the Sheriff is too responsible a person to completely rule out the possibility tax increases, and that Leopold probably would, and that such responses would cost Johnson votes from the "I want something for nothing" crowd. From the looks of the headline of the Capital article, things went exactly according to plan.

Problem is, the headline is misleading at best. It says, "Next county exec must raise taxes, Owens says: Johnson vows only as a 'last resort,' while Leopold rules out hikes." Fact is, both Leopold and Johnson leave the door open for impact fee increases, and raising the property tax up to the cap. Johnson supports the watershed restoration fee, Leopold opposes. Johnson is willing to consider an increase in the "piggyback" income tax, and Leopold says he won't.

As much as I disagree with the Queen's motivations, I appreciate her message, and I think she's right. The next administration would be extremely irresponsible not to raise taxes. An impact fee increase is a no brainer. The County can't afford to keep subsidizing sprawl. Taking the property tax up to the cap also makes a lot of sense, to start cutting into the school backlog. Taxes are a tool, and the County infrastructure and budgetary needs are a project. It's irresponsible to remove tools from the toolbox before one's stint as general contractor has even begun. To get a sense of the scale of this undertaking, see the following:

Outstanding Infrastructure and Other Needs:

  • $1.5 billion in school construction backlog.
  • $500 million+ in stormwater infrastructure backlog.
  • $200-500 million in road infrastructure needs.
  • $100 million/year in retiree benefits.
  • $18 million/year in teacher raises.

    Potential Sources of Tax Income:

  • Increase the property tax up to the cap - Predicted annual income $125 million.
  • Increase the "piggyback" tax on the State income tax - Predicted annual income $80 million.
  • Increase impact fees to recommended fee from 2001 (from $4,500 to $12,500 per home) - $8,000 for each new home. [BRAC could bring 10,000 new homes, or $80 million in lost impact fees if something isn't done fast.]

    Other potential sources of revenue:

  • - Watershed restoration fee ($60 per runoff unit/year) - ~$36 million

    Labels: , ,


    Post a Comment

    << Home