Stafford Republicans and the Art of Twisting the Facts

In case you missed it (given all of our winter weather), the Republican majority on the Stafford County Board of Supervisors repealed the Business, Professional and Occupational License (BPOL) tax on February 2, 2010.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 interested check out my last post.

For those that were unable to attend the public hearing, I decided to put together a little video of highlights lowlights. I actually think that the Republicans can teach a course on the art of twisting the facts. As Albert Einstein once said,

If the facts don’t fit the theory, change the facts.

A few key takeaways before you go. I certainly have some issues with BPOL in general; however, what troubles me the most is the fact that Stafford Republicans continue to misrepresent the facts to further their position on the issue.

They refuse on leveling with residents on how they plan on addressing the huge shortfalls present in the FY ’11 budget. Yeah the $26 million school shortfall and the upwards of $19 million shortfall in the county budget.

It still makes no sense to me that Republicans would use a surplus, which could have been used to lessen the impact of the tremendous shortfalls projected in the upcoming budget, to repeal an annual revenue source that some predict would equate to $140 million over the next 20-years.

For FY ’11, it was projected that BPOL would provide the county with $3.7 million of revenue. Combine the $3.7 million of BPOL revenue now lost with the $3.7 million of the surplus that must be used to cover the costs of repealing BPOL in the FY ’10 budget and the total impact to the FY ’11 budget is $7.4 million. So when the county is facing tough fiscal realities, the Republicans vote to make things even worse for the county, our schools, our roads, our law enforcement and our fire and rescue.  That $7.4 million could have meant that more teachers and deputies would be able to keep their jobs. It could have meant that some much needed road improvement projects were able to happen next year.

The Republicans have failed to have an honest debate with the public on the impact of the decisions that they are making. The reality is that Republicans will have one of two choices now: (1) Drastically reduce core services or (2) raise taxes on existing homeowners. They failed to level with residents during the BPOL debate and chose to avoid laying out the impact of their decisions.

Stafford County is the second fasting growing County in Virginia and, as such, has an ever-increasing need in maintaining and improving core services. As I stated previously, 53% of Stafford Schools do not currently meet Annual Yearly Progress requirements. Will businesses really choose to relocate to a school system that is failing? I think not.

Listen, I have no problem with repealing the BPOL tax as long as the Republicans showed how they planned on replacing this revenue source. BPOL is not a perfect tax, but it is one of the only tools that localities have on raising revenue locally that is not on the back of homeowners or consumers. If businesses have problems with the structure of BPOL, they need to work with their delegates and state senators to fully address them in the General Assembly. I do think that small businesses have some really good points on BPOL. What we need is an equitable tax structure for homeowners, consumers and businesses.

In the end, I’m most upset by the fact that the Republicans used a recently found surplus (due to an administrative error) to repeal BPOL. This is the same surplus that they cried about holding onto back in December when Democrats proposed spending it. I was equally critical of spending this surplus when Democrats tried to do it too.

This political posturing must end and the residents of Stafford County deserve to be put first again!

Posted in BPOL, Stafford County, Stafford County Schools Tagged with: , , , , , , , ,
9 comments on “Stafford Republicans and the Art of Twisting the Facts
  1. Dan Smolen says:

    Great post, Marc!

  2. Patty says:

    Thanks so much for taking the time to put this together! Excellent! This needs to be widely distributed (what is up with Milde? He’s still the same…..)

  3. Kingfish says:

    My question is; now that the GOP has hoisted their ‘Mission Accomplished’ banner, what else are they going to do? Each GOP candidate campaigned on repealing BPOL…

    -More instant gratification courtesy of the Stafford GOP…

  4. sph says:

    There were legitimate reasons for repealing BPOL, you know. Like the fact that when BPOL was not in place, Stafford was a competitive location when it came to a business selecting a place to be based, or open. With BPOL in place, the location and other factors didn’t make Stafford competitive. Without BPOL, more small businesses, and even larger ones may decide to open in Stafford. For example, Northrop Grumman, a national employer of thousands, and a government contractor, is reported to be moving their national headquarters to somewhere in northern Virginia. With BPOL gone, Stafford is now a more competitive location as to where Northrop Grumman may select to put their headquarters, which could create jobs for hundreds in the Stafford area.

    • Marc says:

      You say that Stafford “was” a competitive location when it came to a business selecting a place to be based or opened, prior to BPOL being introduced? What are you basing this opinion on?

      Let’s do a little comparison with our neighbors. The total number of business in Stafford County (BPOL free) increased by 15% between 2005 and the 2Q of 2009. By comparison, Spotsylvania County (BPOL) increased by 23%, Prince William County (BPOL) increased by 16% and the City of Fredericksburg (BPOL) increased by 6%. Due to the fact that Stafford County did not have BPOL, you would think that Stafford would be blowing away neighboring counties in the growth in the number of businesses within the county; however, that is not the case. The numbers would suggest that BPOL is a non-issue with many businesses. I would argue that geographical location, transportation, crime statistics, quality of the workforce, average hourly wages and the quality of our school systems play a much larger role.

      Rest assured that Northrop Grumman is not going to relocate to Stafford County just because we don’t have BPOL. They will consider many other factors. If Stafford County still had BPOL, I believe that their rates were equal or less than all surrounding jurisdictions. The reality is that other NOVA counties, such as Fairfax, Loudon and Prince William have much higher real estate taxes then Stafford too. Stafford is a good place to do business, with or without BPOL.

  5. One of the main arguments in this video assumes that a Global Chain like Target cares about BPOL or not. In the grand scheme of things, I bet the powers that be have no idea where Stafford is, let alone the .01% (if that) tax that is placed on their products. The rationale is flawed.

    BPOL was always about small business in Stafford, never WalMart, Target or any chain that may reside on Garrisonville Road or Route 17.

    • Marc says:

      The reality is that whether you or for or against BPOL, it is already priced into the cost of products and services in the Fredericksburg-region. All of the other surrounding counties have BPOL. Next time you have an electrical problem in your house and need to call an electrician, call one in Stafford County and tell them that you want a BPOL discount. They will probably laugh at you, since their prices are established based on the overall region.

      The whole debate raging about BPOL is much ado about nothing. I would say to the pro-BPOL crowd that the revenue gained via BPOL does little more than put a dent in projected budgetary shortfalls and to the anti-BPOL crowd that BPOL would hardly put any businesses out of business.

      Personally whether we have BPOL or not was never high on my list. What upset me the most during the debate was how the Republicans twisted the facts and failed to level with the public. The hypocrisy they showed on the whole school surplus issue was outrageous.

      If Republicans did not think that we needed BPOL, fine; however, I’m still waiting for them to propose spending cuts or new revenue sources to cover lost BPOL revenues. This should have been part of the whole debate. Still waiting…

  6. Irene Egan says:

    I’d be interested in hearing from the business owners that have to pay the Merchants Cap Tax again. Some were thrilled to have that gone. My issue with the way this played out is that NOBODY told the whole story about the structure of the BPOL tax until it was too late – I had to read the statute word-for-word myself b/c I kept getting conflicting interpretations.

    People were led to believe that the big box stores were exempt from BPOL, they’re not. They were led to believe that Geico paid NO taxes at all, they do (though if anyone read the statute they would have learned that they pay a similar tax directly to the State), and they were led to believe that the tax had no flexibility whatsoever, it does. We heard directly from the money experts employed by the County that it was the most flexible tax the General Assembly allowed to be imposed. The threshold being raised to a cool mil, would have put most of the burden on the big box stores and would have exempted Stafford’s small business owners. Wouldn’t have raised an enormous amount of revenue, but in these times, every bit helps.

    My question goes back to the questions I raised a year ago – why isn’t anyone talking to our GA reps to get the tax revamped to make the tax more fair? The way it’s being presented is ALL or NOTHING! It doesn’t have to be that way. Base it on net rather than gross and keep the threshold limit up to the localities. Delegate Cole knows he he’ll never get the concurrence of any of the Commonwealth’s localities to limit their revenue-generating powers, especially in this economy, so what’s the point?

    • Marc says:

      I’ve wrestled with the pros and cons of a gross receipt tax (GRT) for quite awhile. I understand the negatives that such a tax can create for businesses with small net profits, such as restaurants; however, a net profit tax would have a huge impact on high profit margin businesses, such as engineering firms and law firms.

      With a GRT, all businesses would typically be subject to it and, in theory, it would lead to lower rates than would typically be assessed by a tax on profits. This is mostly because the business base paying the GRT would be much larger. I totally agree that low margin or start-up businesses could be disproportionally affected by a GRT. With regards to BPOL, I believe some of the concerns brought forward by these sorts of businesses could have been better addressed by raising the threshold and exemption levels. I, like you, believe that the levels were set too low. BPOL was also flexible enough to set specific tax rates for different categories of businesses. This allowed the county a great deal of flexibility in setting the rates for these lower margin businesses appropriately.

      There is no doubt that GRT has some issues. It no doubt is favorable to larger businesses that are vertically integrated. The General Assembly could change BPOL to allow for companies to deduct purchases from other companies to remove the potential pyramid effect of this tax and eliminate the aforementioned advantage vertically integrated companies enjoy, with regards to pricing. The reality is that BPOL is already priced into the cost of doing business locally, whether Stafford has BPOL or not. The reality is that all other surrounding jurisdictions already have it.

      By comparison, a tax on profits would potentially lead to many larger companies paying close to nothing. There are many ways for these types of companies to “legally” manipulate these numbers.

      At the end of the day I think with the right rates, exemption levels and thresholds, Stafford County could protect small businesses. Truth be told, I’m not in love with GRT; however, it is far less scary then Republicans made it out to be. The Republicans were very effective in turning this whole thing into a winning political issue, but were less than truthful with the overall effect of it.