From: Arthur Purves, President, Fairfax County Taxpayers Alliance (www.fcta.org)
Madam Chairman and Members of the Board:
My name is Arthur Purves. I address you as president of the Fairfax County Taxpayers Alliance.
School officials state that since 2008 the FCPS budget has been cut by $435 million, including more than 2,175 positions. In fact, according to school budget documents, spending increased $354M since 2008 (from $2,144M to $2,498M) and staff by 1,216 (22,261 to 23,477) positions, or one additional staff member for every 17 additional students (from 166,307 to 186,785). Since FY2000, the FCPS inflation-adjusted budget has increased 50% faster than enrollment (38% vs. 22%).
For sixteen years, real estate taxes for the typical Fairfax County homeowner will have increased 140%, three times faster than inflation (47%), from $2400 to $5700. Now the county faces difficult economic times. Taxpayers are leaving. Between 1999 and 2011 the IRS found that Fairfax County lost $6 billion in Adjusted Gross Income due to taxpayer flight. The George Mason University Center for Regional Analysis finds that in the Washington Metropolitan Area, mid-wage jobs decreased and most new jobs were low-wage jobs between 2008 and 2013. Since 2013 Northern Virginia has lost 12,000 high-paying federal and professional jobs due to sequestration. Since 2008 Fairfax County food stamp (SNAP) applications doubled, from 12,000 to 24,000. The number of FCPS students qualifying for Free or Reduced-Price Meals has increased to 28%. We are becoming Detroit.
Seventy percent of county and school spending increases are not for demographics but for raises and benefits. For the past 15 years, the average annual raise for approximately 30,000 county and school employees was 4% a year, which was three times greater than private-sector raises. The county and schools are paying 20% of an employee's salary as the employer's share of pension costs to pay down the unfunded liability of pension trust funds. Pensions allow retirement at age 55 with up to 75% of salary. The private sector is replacing pensions with 401Ks, where the employer contributes only 3% or 4% of an employee's salary. County and school employees have "Cadillac" health plans, with zero-deductible in-network options.
The cost of raises and benefits since 2000 was larger than the revenue from increasing real estate taxes 140%. So the supervisors in FY2013 and FY2014 spent $79 million from reserves to pay for county and school Cost of Living Adjustments (COLAs), thereby jeopardizing the county's AAA bond rating.
FCPS salary and benefits are higher than all neighboring jurisdictions except Alexandria. The Fairfax County Employees' Retirement System benefits are more generous than neighboring jurisdictions. FCPS gets 15 applicants for each job opening; the county gets 200 applicants. When asked how many employees leave because of salary, both the county and schools stated they did not collect that data.
Taxes should be affordable, meaning they should not increase faster than inflation or household income. If that had been the case since FY2000, real estate taxes would have increased no more than 47% and county disbursements would be $1 billion less ($2.8 billion instead of $3.8 billion).
In FY2000, county benefits were 23% of salary; now they are 44%. Likewise school benefits increased from 29% to 47% of salary. Together, benefits increases since FY2000 cost the taxpayer $700 million.
Fairfax County needs to cut taxes to attract jobs. For FY2016, advertised budget raises real estate taxes again, to pay for 3% raises for county and school employees and pay for increased county pension costs. The Center for Regional Analysis reported that Fairfax per-capita income decreased 2.1% in 2013. According to the Bureau of Labor Statistics, the Fairfax County average weekly wage increased only 1.2% in 2014.
The supervisors should rescind the FY2016 raises and reduce the real estate tax rate to offset the assessment increase. There should be no raises until the reserves are restored. Also, school and county benefits costs should either be reduced to 29% of salary or employees should contribute more of their salary to benefits costs.
Taxpayers need teachers and police, but teachers and police need taxpayers.
The choices are difficult. Raising taxes for raises may preserve raises and benefits in the short run but jeopardizes county and school employees' future by further eroding the county's economy. Reducing salaries and benefits is a hardship on county and school employees, many of whom cannot afford to live in the county, but it protects their future by rebuilding the county's economy. Even with these cuts they are better off than the private sector taxpayer who does not get 3% raises, does not have pensions, cannot retire, and has high-deductible health insurance.
Fairfax County needs a better balance between compensation and taxation.