Mark Warner's Broken Promise Cost Southside Virginia Millions: Part 2
Tuesday, August 19, 2008 at 08:59PM In my first post on this subject I summarized my case as thus:
The result... just this FY 2007 PPTRA tax relief to this region totaled $10,699,502 dollars straight into the economy. Mark Warner's broken promise has left that region 36% short, or that area would have received $10,699,502 X 1.36, or $14,551,322.
Therefore, $3.851,820 is missing from the taxpayers wallets and pocketbooks to help them meet their bills during this time of higher food, and energy prices!
Well, those are big numbers. $10,699,502 and $14,551,322, and they need to be put in perspective. Should a business comes along and choose to locate in the Danville area lets say, and pay an average wage of $15 per hour, how many workers would they be able to employ with a $10,699,502 payroll?
For simplicity sake a $15 hour worker x 40 hour work week, x 52 weeks a year equals $31,200 in annual wages. Now the employer has to match the workers social security tax so that will cost the employer another 7.5%, or $2,340 annually. For the sake of argument, let's say that the employer also pays another 7.5% in benefits to the employee such as group health insurance, disability, group life etc, so we increase that another $2,340.
Therefore, the worker is compensated $31,200 in wages, and another 15% or $4,680 in benefits for a total of $35,880 per worker. Divide that number by $10,699,502, and you come up with a total of 298 workers. That folks is the impact of the PPTRA , or Car Tax Program that Governor Jim Gilmore implemented annually on Southside Virginia's economy.
Moreover, divide $14,551,322 by $35,880, and you come up with 405 workers. Thus Governor Mark Warner's broken promise to eliminate the Car Tax during his term has shorted the area the economic impact of 105 workers earning an average wage of $15 per hour.
How much simpler can I make this?
Chris Graham, an editor of the our local Augusta Free Press, who to his credit came out of the closet and took over the Chairmanship of the local Waynesboro Democratic Party is wondering why the Gilmore campaign is talking about the Car Tax Cut. My response is that I do not pull the levers for Gilmore's campaign, but they have approved my Car Tax Facts that shows plainly how just in the Cities of Waynesboro and Staunon, along with the County of Augusta's citizens benefit from $7,904,029 million in car tax bills in FY 2007.
Yes, I will do the math for you, using the same criteria above is 220 jobs! Statewide if you did the same analysis you'd take $950,000,000 or the total PPTRA appropriation, and you would have the impact of 26,477 jobs.
OK, you're not happy with $15 an hour... ok $30 an hour was the average wage I believe a certain Toyota Car manufacturer was going to bring to Augusta County, and they were talking about 2 to 3,000 employees. So you take 26,477 and divide by two equalling 13,238 workers. Let's be fair and let Southside VA have a Toyota plant with 2,500 employees, NOVA, Richmond, Hampton, along with a few workers to spare.
I'd say that's economic impact folks....big time!
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Reader Comments (22)
"How much simpler can I make this?"
"... Therefore $3,85,820 is missing..." "A $20,699,502 payroll..."
Are you sure you didn't leave off some cents?
Yea, really simple!
Well... if that's the worst criticism they can come up with, spanky, job well done
Why bother with stronger criticisms? You guys aren't bothering to be real, viable opposition, so why should we waste significant time on you? Remember North in 1994 and Allen in 2006? Those were real candidacies, ones we actually had to fight. Why RPV didn't care enough to fight to keep one of their own seats will probably remain a mystery for some time...
Skeppmora:
Where do you see any of this?
"... Therefore $3,85,820 is missing..." "A $20,699,502 payroll..."
Have I just left your mind so boggled by such a simple concept you're brain receptors have whacked out your eyeballs?
gogfaC:
Why bother getting into another losing argument, because Gilmore has the issues to beat Warner? Continue to rely on your arrogance maybe someone will be impressed.
STD, if Jim Gilmore had the issues to beat Mark Warner, he might actually have a few campaign dollars and a realistic chance of winning. He doesn't.
The issues, are there, it's pre-labor day, let's see what happens once the hysteria starts to set in.
Is all you can get from the Warner campaign today ad hominem attacks? Do you ever have anything productive to say about YOUR candidate?
John, I don't work for Warner, and I really don't need to say anything productive about him, given that he's essentially unopposed. When you guys actually decide to put up a fight, then we can engage in more substantive comparisons.
I don't buy it for a second.
John, you don't have to buy anything, except maybe a new HDTV to catch Gilmore's concession speech in all its glory.
In laying out the math, isn't it important to consider the relatively high subsidy that southside received -- and continues to receive -- from net state government revenues raised from all taxes, as compared to NoVA?
Insofar as the burden of the car tax fell hardest on those with the most expensive cars, didn't its progressive nature generally benefit those on the southside -- or at least those who do not prefer new Mercedes L series vehicles?
Didn't raising money through the car tax more closely approximate the Republican ideal of user fees than raising money through income taxes?
Are you really going to boggle our minds with 19 more posts on this theme?
The Donkey:
Thank you for posting constructive comments as opposed to the other arrogant (and anonymous) response I received on this post.
Clarify if you will... you acknowledge that South Side VA has benefited from a rising amount of income taxes in NOVA regarding the Car Tax Reduction, or a transfer in tax burden, or relief?
I look forward to our exchange, I just want to clarify your statement on the above.
Thanks,
cg
Because of patterns in spending, I would think that NoVA suffers a net loss to SoVA from revenues collected both from income tax and car tax.
I would also guess NoVA probably experiences more of a dollar for dollar loss from income tax than from car tax. But then, I am just guessing.
Do you have the numbers?
Ultimately, what is more important to me -- and what should be important to everyone -- is whether revenues are high enough to pay for what folks expect from government, and whether these expectations are too high. Up here in Fairfax, the revenues that come back are no longer enough to deliver what is needed and what people legitimately expect. Car tax relief is a part of the reason why because nothing replaced the revenues lost to us from car tax relief. The quality of life is decreasing.
Does the net loss in NoVA mean that SoVA wins?
In the long run, I doubt it. NOVa is the economic engine that drives Virginia. I think that if the pie shrinks, we all lose.
If I am right, Guv. Gilmore bears his share of responsibility.
Regards!
Donkey:
I expected you to be more honest with this issue. Typically Democrats, namely your Obama tax the rich and give to the poor. You are twisting in the wind with your sentences....
NOVA has exploded in income tax revenues in the last decade while Southside VA's have fallen... that's a fact.
Yes, Southside VA has been a net tax burden winner is this equation, but obviously all you want to twist in your comments is that it's not Robinhood Scenario from the Democrat/ic model, and ignore the fact that yes Jim Gilmore's Car Tax Cut benefited the working class... while the Democrat/ics have opposed it!
No, you wish to publicize in NOVA that Jim Gilmore screwed NOVA in taxes and sent the money to Southside. Further you claim that the Car Tax Cut which still benefited all Virginians, who own a car only robs from government's ability to spend more, and more and more!
Why don't you face up to the facts? The Car Tax Cut helped the poor all over Virginia afford transportation costs, and delivered a boon of a tax cut to rural Virginia.
Government spending starting with the Federal Govt, followed by localities, Higher Education, and ending with the Commonwealth's spending is out of control.
Be honest... Mr. Twenty Point lead screwed Southside, and the entire State, by breaking HIS PROMISE, not not raise taxes, and eliminate the Car Tax, period.
Be honest, admit Southside Virginia deserved the entire relief under the PPTRA (car tax cut), and that spending on every level of government is out of control !
STD, if nothing else, you are a treasure trove of predictable hilarity.
gOgfac:
You predictably don't engage on the issues, because you're a sure loser in that regard.
The Donkey knows there is an issue in the Car Tax reduction, and is addressing it, but I fear he is trying to flip the benefit Southside VA received into some kind of fodder for NOVA... Which btw goGfac, received $2.4 Billion dollars in Tax Relief in the program from FY99' to FY2007.
That's tax relief! Think it helped the local economy?
What I think, Spanky, is that income taxes have not increased to make up for the loss in revenue that resulted from car tax relief. So car tax relief is part of the reason why this year:
* my youngest son's teachers' salaries are frozen and he is not allowed to change the classes he elected last february;
* my eldest son's college tuition rose way above inflation;
* numerous road improvement projects in my area have been cancelled and deferred;
* VDOT is not mowing the shrubbery as often as they used to on a median near my house and consequently noone taking a left turn into my neighborhood can see oncomming traffic.
Gilmore could have anticipated the real losses in education, transportation and other services that proceeded from car tax relief and messed us up in NoVA if he had factored in cyclical economic factors.
How do you think these kinds of losses are effecting Virginia as a whole?
STD, I've tried to make this clear, but perhaps I haven't done so. You haven't earned a debate on the issues, any more than the Green or Libertarian parties have. If and when you achieve viability on the campaign trail, then we can discuss Jim Gilmore's legacy of failure that has his candidacy in such an unenviable situation: unpopular and dead broke. However, until such time, I fail to see why your candidate should be given any more consideration than Gail "For Rail" Parker.
Donkey:
These are good things to discuss. First of all VDOT should have designed the median with a low crawling schrub that provides an evergreen vegetation, and never needs to be mowed.
Cost per pupil is approaching college tuition, why? Why is administration so fat? Why are the children not really any smarter even though spending on them has gone up exponentially?
See my previous posts on four years of 'mr twenty point lead' and two years of kaine to double tuition in VA, when for four years under Allen tuition was frozen, and lowered twenty percent under Gilmore and frozen for his four years... Amazingly enough the colleges functioned just fine.... I'd love to hear your comeback on this, and keep in mind VCU's brick and mortar campaign that has done nothing for academics, and run expenses thru the roof.
VDOT just got a three billion dollar bond issue to blow on roads again, see present and past management of VDOT by Warner and Kaine.... like Gilmore six years removed from office is seriously to blame for mismanagement, by our state government...
gogfaC:
You're still a pompous jerk. There is no excuse for arrogance, but you'd realize that if you weren't so insolent.
Spanky:
Responding to your questions under today's schedule requires both summarizing, and plagerizing. Here goes:
When Jim Gilmore ran for governor in 1997, he wrote to local elected officials promising that car tax relief “would be paid for from new revenues received by the Commonwealth, not from cuts from existing programs.” A Gilmore press release stated, “in the event that revenues do not grow sufficiently to fund the tax cut, the legislation would freeze the state’s percentage at the level then in effect.” [Gilmore Campaign Letter, 5/14/97; Gilmore Press Release, 1/23/98]
The Washington Post reported that “Spending in Virginia rose more than 40 percent during Gilmore's term, faster than in all but three states.” It added that “the earliest suggestion that the state was spending more money than it really had” dated back to “financial reports presented by Gilmore's finance secretary” in August 2000. “The 10.5 percent growth in tax collections announced that day was propped up by about $84 million in one-time corporate tax payments. Tax revenue also seemed higher because of delays in the distribution of tax refunds.” [Washington Post, 3/3/02]
By the time Mark Warner was elected governor, Virginia faced its most serious fiscal crisis in over two decades. Five years of unusually strong revenue growth, coupled with decisions by his predecessor and prior legislatures to cut taxes while also increasing spending commitments, placed the Commonwealth on a path to financial meltdown. That meltdown was made more serious by the post-9/11 recession, and the stock market and technology industry declines that followed. A state budget shortfall estimated at $700 million by the previous administration was discovered to be over $3.8 billion shortly after the inauguration, and ultimately totaled more than $6 billion.
The magnitude of the budget shortfall threatened Virginia’s ability to meet fundamental commitments to public and higher education, health care, public safety, and other services essential to millions of Virginians. And it threatened Virginia’s highest-possible AAA bond rating.
Governor Warner’s first actions were to re-write the budget prepared and submitted to the General Assembly by his predecessor. Governor Warner substantially lowered its faulty revenue estimates, eliminated many budgetary gimmicks, slashed agency spending, and identified user fees which did not cover the cost of services provided.
Governor Warner’s initial tax-reform proposal called for phasing out the car-tax, but the legislature presented a compromise version of the bill capping the car-tax phase out at 70%.
The Commonwealth of Opportunity Tax Reform package Governor Warner presented in November 2003 also proposed to accomplish what Governor Warner’s predecessor was unable to do: it included a sensible proposal to fully fund a complete end to the personal property tax on vehicles over a four-year timeframe.
Warner’s 2003 proposal raised some taxes, including Virginia’s lowest-in-the-nation cigarette tax and income taxes on the very highest wage earners. It included a modest increase in the state sales tax, even as it cut the sales tax on food by 1.5 cents and removed 140,000 lower-income Virginians from the tax rolls altogether. It provided incentives to small businesses to invest. Governor Warner’s tax reform proposal eased the tax burden on military, reservists, and National Guard families.
The proposal also proposed elimination of the Virginia estate tax for working farms and family-owned businesses, and ended the unfair accelerated sales tax collection from retailers at the end of each fiscal year. It also had an important central feature: While it would increase total revenue to address the long-term structural imbalance in the state budget, 65 percent of Virginia taxpayers would actually have paid less if the proposal had been enacted as introduced.
Governor Warner took steps to revitalize Virginia’s commitment to higher education – commitment that under Guvs. Gilmore and Allen had been questioned as state support declined as an overall percentage of institutional budgets. The 2004 budget reform included $262 million in additional funding for higher education, the second largest increase in the nation that year.
In addition, Governor Warner shifted the focus in higher education from enrollment to the actual number of degrees awarded. The number of degrees conferred increased each year under Governor Warner’s administration, growing from 46,963 in 2002 to 55,033 in 2006, an increase of 8,070 in a year-to-year comparison.
In the fall of 2003, Governor Warner launched a pilot program to increase the efficiency of local school systems, ensuring that as many dollars as possible were dedicated to classroom instruction. Auditors were deployed from the state’s Department of Planning and Budget to willing school districts to make recommendations on how savings could be achieved in the administrative portions of the budget – from the management of bus fleets to energy efficiency.
By the time the Governor left office, the state had conducted reviews in nine school divisions, identifying almost $10 million in annual savings – eight dollars in savings for each dollar spent on the reviews. Eighteen more reviews were completed in 2006 and 2007 using private sector consultants with oversight and review provided by state auditors. To date, these school efficiency reviews have identified more than $23 million in recommended savings.
When Governor Warner took office, no part of state government was as inefficient and broken as the Virginia Department of Transportation. Reforming the agency and restoring confidence were top priorities – and the new governor got results.
From completing a mere 21-percent of projects on time in 2001, VDOT was achieving an 82-percent on-time mark by the time Governor Warner left office. Likewise, the abysmal 50-percent on-budget record in 2001 improved to 88-percent by 2005.
Governor Warner took immediate action to restore fiscal reality to VDOT and overhaul the agency to get projects completed on-time and on-budget. Governor Warner insisted that VDOT use realistic transportation revenue and cost projections to prepare a fiscally sound transportation plan for the Commonwealth.
Through increased accountability and innovative reforms, VDOT made dramatic improvements during Governor Warner’s term:
•Designing and implementing the first-in-the-nation Web-based dashboard system, allowing the public to track the current status of every VDOT construction project.
•Requiring quarterly public status reports on projects based on fixed on-time and on-budget criteria.
•Instituting a debt management policy to ensure fiscal responsibility.
•Advocating common-sense new policies such as the Rural Rustic Roads program, to “pave-in-place” certain low-volume roads at a fraction of the cost of normal engineering, design, and construction.
•Creating flexibility for local governments to voluntarily assume responsibility for more road maintenanceand construction.
•Streamlining VDOT operations. In 2001, there were 10,250 VDOT employees. By the end of Governor Warner’s term, that number had been reduced to about 9,100.
•Entering into a public-private partnership to extend Metro service to Dulles Airport, advocated for the TransDominion Express across southern Virginia, supporting a light rail in Norfolk, and greatly expanding the capacity of the Virginia Railway Express (VRE) commuter line between Fredericksburg and Washington.
•Governor Warner’s final budget proposal dedicated nearly $625 million in one-time surplus General Fund dollars to investment in high-priority transportation projects and programs.
In spite of all these efforts and accomplishments, Virginia is presently still falling short on the revenue side. I think partisanship and ideology in our legislature have been largely to blame, but I also think that it is fair to trace the roots of the problem back to the Gilmore administration and its fiscal myopia. I surmise that most Virginians agree, which is a big part of why your guy is going to lose.
Donkey
PS If you really want a dialogue, you might consider using our next President's proper surname. (At least you are not calling your guy "McPain" anymore.)
Donkey:
Now that's the kind a sport I appreciate (take note gOgfac)
OK plagiarism.... like from maybe a Warner press release ;-)
You're covering a lot of ground here....
On Spending during the Gilmore administration, Brandon Bell points out that Car Tax Reduction payments were put into 'spending'... when actually that's money going back into the economy.
Callahan who broke ranks to back Warner is in/famous for saying "You Send it, We Spend it!" Governor Gilmore short circuited their little game, and BTW where is the WaPo to draw the exact same conclusion that Tim Kaine and his rosy projections, which have left us in a (estimated) $1 billion dollar deficit going to conclude that Kaine has 'bankrupted Virginia'?
When Donkey? Why isn't that a fair statement? oh, of course when the gov, on the receiving end of a recession is a Democrat and not a Republican. I call BS!
I don't know off hand how many degrees were awarded under Gilmore, but are you trying to say those numbers weren't up? Certainly enrollments were up, when a Governor declares 20% off for four years! Undoubtedly, some of those degrees awarded under 'double my tuition' Warner were sophmore's thru seniors while Gilmore was Governor....
heck everyone had to be desperate to graduate before he could double their tuition, along with Kaine!
Seriously, VA is falling short of revenues? Come on man.... who's going broke first the working class family or govt? The only one of those two that has a track record of spending more and more annually is govt!
Give it a break... nice work by those Warner staffers to feed you this stuff? ;-) Love ya mean it!
very interesting article. on most issues I agree with the author:)