Stafford Republicans Poised to Reinstitute Merchants’ Capital Tax

Unless you have been living under a political rock, everyone should be no doubt aware of a public hearing scheduled for tomorrow to reinstitute the merchants’ capital tax and nix the BPOL tax. Republicans made BPOL a key issue during the last campaign and pledged to kill it. They ended up winning a majority on the Stafford County Board of Supervisors (5-2) and are poised to follow through on their pledge tomorrow (this is actually a forgone conclusion).

How do Republicans plan on paying to repeal BPOL (since the money was already included in the FY ’10 budget)? As I predicted back in December (here and here), they plan on using the remaining $4.8 million surplus. That’s right, the $4.8 million (It was actually $6.2 million, but some of the money was already spent) that was discovered late last year because of an accounting error between the school board and the county two years ago. When Democrats proposed spending the surplus in December, Republican outrage boiled over. Supervisor Cord Sterling (R-Rock Hill) had the following to say when Democrats proposed spending the surplus,

We have a bleak financial outlook…It’s not a responsible way to govern. We need to put governance ahead of politics. Let’s wait and figure this out during the normal budget process.

And Supervisor Paul Milde (R-Aquia) added,

This amounts to a $6.2 million raid of Stafford’s accounts…I see Democrats trying to give away $6.2 million.

I would ask Sterling and Milde what has changed since December? Could it be that they are now in the majority and want to use the funds for other purposes? To Sterling, how is it good governance to repeal BPOL and cover the revenue loss with the surplus? I guess the financial outlook isn’t as bleak as it was in December or the outrage a month ago was more about wanting to save the money so that it could be used to repeal BPOL. It sounds to me that politics is being put ahead of good governance.

To Milde, I guess the Republicans are now trying to give away the remaining surplus. The only difference is that Democrats were giving the money to teachers and deputies, plus funding a required trust setup for post-employment benefits of school and county employees; and Republicans are choosing to give money to local businesses by repealing BPOL. This is not to say that one group deserves the money over another, but these are just simple facts.

Like I said back in December, both Republicans and Democrats wanted to spend the money in different ways. That is what made the Republican outrage so disingenuous. I was against spending the surplus until the budget picture became clearer. It is now clear that things are continuing to deteriorate and the FY ’11 budget already contains a $6.9 million revenue shortfall. Given declining state revenues, the picture will surely get worse. Repealing BPOL will only compound and exacerbate the already precarious budget situation.

It is no secret that I have been highly critical of the way in which BPOL was passed in the first place and have some serious issues with the structure of it. The reality is that localities are limited in the number of tools at their disposal to generate revenue. Unfortunately for homeowners, when additional revenue is needed that usually equates to higher property taxes. What we need is an equitable tax structure for homeowners and businesses. That doesn’t mean that businesses should be punished, but we need to understand that everyone has a stake in our communities and work towards some compromise.

Del. Mark Cole (R-Spotsylvania) recently introduced a bill to prevent any localities that have not enacted BPOL by January 1, 2010 from doing so in the future.  This doesn’t seem like much of a compromise to me, but politics at its’ worst. It is important to note that BPOL is a tool provided by the state to the localities and any changes to it must be introduced and passed in the state legislature.

Whether you are for or against BPOL is beside the point right now. The reality is that a bi-partisan group of supervisors, including Sterling and Dudenhefer (R-Garrisonville) approved the FY ’10 budget, which clearly included BPOL as a revenue stream. It seems fiscally irresponsible to me to remove a revenue stream by spending the surplus (double whammy there), which could instead go towards reducing the looming budget deficit. We need to do everything in our power to protect our core services (e.g. education, police, fire and rescue). The reality is that we are in for either severe cuts to these services (many of which are already cut to the bone) or a massive increase in homeowner’s property taxes to sustain them. So what are Republicans proposing going forward? I’m waiting…

I, for one, am deeply concerned about our schools. Did you know that approximately 53% of Stafford’s schools did not meet Adequate Yearly Progress (AYP) last year? No Child Left Behind stipulates that any school system that receives federal funds must meet 100% AYP by 2014; and that schools that don’t make AYP for two or more consecutive years in the same content area be sanctioned, which would ultimately affect federal funding. If Stafford is hoping to attract businesses to the area, I assure you that a failing school system will not convince them.  The remaining $4.8 million surplus could easily mean that more teachers keep their jobs (ensuring reasonable class sizes) and we can make the necessary investments in our schools for fiscal year ’11 and beyond.

The Republicans have tried to make the argument that BPOL will hurt businesses and cause them to leave Stafford County in this economic climate. If that is the case then why isn’t Spotsylvania or the City of Fredericksburg considering a repeal of BPOL? Again this isn’t an argument for or against BPOL, it is simply a fact. Yes, a fact that current Supervisor Gary Snellings (R-Hartwood) agreed with in 2004.

Snellings said the following about BPOL back in 2004,

My argument has always been that if you have BPOL, you will run businesses out of the county…But I don’t see businesses jumping across the Rappahannock River because Stafford doesn’t have BPOL.

Snellings went on to say back in 2004,

I have never been in favor of BPOL…Until now. I don’t see any other way we can relieve some of the burden on homeowners other than putting it on BPOL. Nobody likes taxes, but the reality is, this is not as big a burden as we are being led to believe.

So in summary, Snellings didn’t see businesses coming to Stafford because of not having BPOL, believed BPOL provided a means to relieve the tax burden on homeowners and it wasn’t as big of a burden as everyone was being led to believe. Now he and his Republican colleagues have changed their mind on BPOL? Since I don’t believe there have been any substantive changes to BPOL since 2004, why the sudden change in opinion? Again, this is politics at its’ worst.

Going forward, we can only hope that our elected officials put the needs of the many over their own. The severe budgetary problems we are facing belong to no political party. It is time for them to put Stafford County residents first. I’m tired of the hypocrisy. What we need is fiscal restraint and responsibility and not political posturing.

It is already a forgone conclusion that Republicans will use the surplus to repeal the BPOL revenue stream (which some have stated would equate to $140 million over the next 20 years). The problem with all of this is that Republicans still have failed to address the revenue stream problem moving forward and have instead tried to make repealing BPOL appealing through the use of the one-time windfall (surplus). They are essentially out selling the bearskins before they have even found the bear.

At this point, I can only hope that Republicans level with county residents on what this will mean in terms of our property taxes and core services moving forward; however, if history prevails, I won’t be holding my breath.

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2 comments on “Stafford Republicans Poised to Reinstitute Merchants’ Capital Tax
  1. Helene Domi says:

    Great piece, Marc. I couldn’t agree more. I sent all the BOS an e-mail expressing my dismay at the way they are attempting to “rob Peter to pay Paul.”

  2. Schmuel says:

    I was never in favor of BPOL until I learned that my small business’ annual tax liability would go from about $400 under the Merchant’s Capital Tax to ZERO under BPOL.

    So while the pigs on the board are slapping themselves on the shoulders, I am again left holding the feedbag. My question to Chairman Dudenhefer and Vice Milde: should I make the check out to CASH?

2 Pings/Trackbacks for "Stafford Republicans Poised to Reinstitute Merchants’ Capital Tax"
  1. […] Also as a direct result tomorrow, Republicans will be voting to reinstitute the merchants’ capital tax and get rid of BPOL (I’ll have more to say about this in a subsequent post here). […]

  2. […] 2, 2010. I pretty much said that this was a forgone conclusion in my last post on the subject here. I’m not going to reiterate all the points I’ve already made on the topic, so if you’re […]