Fairfax County – a Case Study on Government Excess Spending
By Mike Thompson • Feb 3rd, 2009 • Category: Feature, Government ReformAs local governments throughout the commonwealth struggle over budget deficits facing them this year and in the next fiscal year, it is instructive to look at Fairfax County’s spending over the past few years.
The annual Fairfax County Budget Analysis, recently published by the Thomas Jefferson Institute clearly outlines how government spending has caused much of the current financial stress facing the largest county in Virginia. Important lessons can be learned from Fairfax County that are essential in understanding the current debt faced by our state and by our local governments around Virginia.
Comparing government spending growth to what would have happened had spending increased only at the rate of inflation (Consumer Price Index) and population growth provides the citizens a bench mark from which to better understand why governments are in such dire financial shape. If government grows at this rate, then the financial burden of government remains constant and no programs are cut. If government grows faster than this formula, then the burden of government is increased on each of us.
Over the past four years Fairfax County spent $521 million over what the CPI/population formula would indicate, increasing government by more than was necessary. Government is $521 million more expensive than had spending been kept under better control. This accounts for fully 80 percent of the current budget deficit, and for the four year period prior to last year, that overspending amounted to more than $1 billion.
Many local political leaders are saying that the budget shortfalls are due to declining property values which have reduced projected government revenues. Well, that’s just the easy answer that elected officials want to hide behind as an excuse for years of financial overspending – at least that’s the case in Fairfax County.
But let’s now look at a clear example of how this local government continued to spend great amounts of taxpayers’ money even when the housing boom had begun to deteriorate. According to the preliminary numbers released by Fairfax County in its own budget documents, the revised spending for Fiscal Year 2008 was almost $68 million more than the Board of Supervisors approved six months earlier! So while property values were tumbling, the elected Board of Supervisors actually added to its own spending $68 million. That’s more than 10 percent of the current projected budget deficit.
Had Fairfax County spending been limited to that of the approved budgets over the past four years, fully $239 million less would have been spent! Yet these dollars increased the base of government and account for more than a third of the project $650 million budget shortfall.
Now, let’s look at just one major spending spree. In the last few years, the government in Fairfax has purchased over 3,200 rental units, becoming the largest landlord in the county. The housing bureaucracy this has created is supposed to provide affordable housing for teachers, police, government workers, etc. However, few if any of these government workers live in these units and, on top of that, subsidies are made to renters making up to $99,000 a year. This shows that Fairfax County had so much money that is had to look around to find something to spend it on. So bonds were issued to pay for these rental units which consumed monies that could have gone to up-dating schools that are in terrible shape. Moreover, the city of Arlington has no rental units, but still addresses the issue of affordable housing. So what possessed Fairfax County to go into business when the private sector is where rental units belong?
When similar overspending issues were brought to the attention of the Fairfax County government more than a year ago by the Thomas Jefferson Institute, the County Executive issued a rebuttal full of misrepresentations. When those were pointed out to him in detail there was no response whatsoever. That is not how a representative government should operate.
So what needs to be done?
First, let’s have the check books and the contracts that the county government and school system sign put on line so that everyone can see where tax money is being spent. Other states and localities have done this, so can Fairfax County. Then, let’s have Supervisor terms of office be staggered so that half are elected every two years so more citizen input is allowed. And, let’s have a robust Citizens Budget Oversight Committee to review spending, prioritize government programs and suggest how government can be more efficient. Competitive bidding on government services could save millions, and much more can be done if elected officials were really serious about reining in the growth of government by prioritizing that government spending. A list of an additional16 better-management suggestions are outlined in the Jefferson Institute’s latest Fairfax County Budget Analysis.
Today’s government spending crisis is much larger than needed to be the case. Had our elected official limited spending to the rate of inflation and population growth government would have grown but at a much more sustainable rate. Unless this change takes place at the state and local level, government spending will not be reform and we face a similar crisis once again in a few short years.
Mike Thompson is the chairman and president of the Thomas Jefferson Institute for Public Policy, Virginia’s premier non-partisan public policy foundation.
For 24 years Mr. Thompson owned his own marketing company in Springfield. During 11 of those years he was also president of a family owned group of furniture stores in Georgia. After selling his company he started the Thomas Jefferson Institute.
He has been very active in national, state and local politics and has been a member of a number of community organizations, commissions, and committees. He is the Past Chairman of the Virginia Leadership Council for the National Federation of Independent Business (NFIB) and serves as Vice Chairman of the internationally acclaimed Fund for American Studies.
These views are his and do not necessarily reflect those the Institute or its Board of Directors.
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[...] by bwana on February 3, 2009 The Jefferson Institute today released a summary of previous analysis showing how the current BOS, which as Mr. Surovell of the FCDC has told us is [...]
Thank you for this analysis. I have been wondering about this math myself as municipalities decry budget shortfalls. Meanwhile as property assessments skyrocketed, they would knock a couple pennies off the tax rate to make everyone feel better. Clearly, underlying costs of core services were not growing at the same rate as property values. There needs to be more publicity of this given the level of “woe is me” being shouted by local governments.
“So bonds were issued to pay for these rental units which consumed monies that could have gone to up-dating schools that are in terrible shape.”
Your argument makes no sense; you can’t say that the County overspent its budget AND then say the money could have been spent on something else (schools). You can’t have it both ways, you either disagree with how the money was spent or you think that the money shouldn’t have been raised at all, contributing to the budget overspending.
I also think that some of the other landlords would take issue with crowning the county as the largest landlord, Van Metre and Oakwood to name a few.. Pat Herrity called the county ONE of the largest landlords in the county after initially saying they were THE largest when he kicked off his campaign for Chairman of the Board of Supervisors. Its really hard to correct mistruths once they have made headlines. Check the web and you will see how this mistruth made a number of blogs, letters to the editor and conservative web sites.
Not a very well-researched article.
Bond payments are not part of the annual budget analysis of Fairfax County. So the overspending numbers in my article and in the annual analysis by the Jefferson Institute deal with General Fund dollars and not the monies used to pay off bonds. By using bond monies to build a huge housing bureaucracy (whether Fairfax County is the largest or third largest or one of the largest makes no difference in the simple fact that government should not be in this business in the first place) takes bonding capacity away from what could be available for schools. Fairfax County has a self-imposed bond ceiling for all bonds. Clearly spending hundreds of millions to becomie a huge land lord for rental properties takes away from school projects which are the role of government. And the taxpayers subsidize rents in these properties for occupants to make up to $99,000 a year. This is not the proper role of government.
Fairfax County continues to spend monies that it appears they dont have. Just last week, the Community Services Board hired 2 supervisors in positions that was not necessary to fill..
“… the government in Fairfax has purchased over 3,200 rental units, becoming the largest landlord in the county.”
but then you write:
“(whether Fairfax County is the largest or third largest or one of the largest makes no difference…”
Then why mention it at all? All I am saying is that its a great disservice to your argument when you don’t do the requisite background research.
You are allowed your own opinion, but not your own facts.
Whether first or third, the basic facts are the same: more than 3200 rental units owned by Fairfax County. This is an example of spending beyond the core functions of government. You are focusing on a grain of sand rather than the beach. In the scheme of things whether first or third, the problem is the same. I concede the point to you if that makes you focus on the important stuff.
If the budget is re-set to CY2000, then increased by inflation and population, there is no shortfall (see http://www.fcta.org). The shortfall is a direct result of the excess in spending. Besides, where is the economy of scale as the population increases?
To me the” important stuff” ARE the facts. Its hard to believe it took this much energy and time to concede this minor point, albeit out of convenience rather than in the interest of being correct.
Thanks for the article, it was informative.
Why is the government in the business of providing affordable housing? Nobody has a right to a home, just the right to work towards one. We are in this mess because people bought homes they couldn’t afford, and now the fiscally conservative are being punished. Our nation is now dependent on consumer spending and a paycheck to paycheck lifestyle. Not very productive, what an upside down world.
PS – Looking forward to Fairfax County increasing assessments again, must be nice to vote yourself a raise…
Well done, Mike. The lack of transparency in Fairfax County government shields the irresponsible from accountability. Those who choose to quibble over whether the county is the largest landlord or merely one of the largest seek to distract from the larger point that the county should not be a landlord.
The shibboleth “affordable housing” is used to spur our emotions when all housing is by definition affordable to those who can afford it. If I cannot pay for the place I am living, I move to one that I can afford and hence live in “affordable housing.”
Not that I recommend it, but if the county government wants to make sure teachers, policemen etc. can afford to live in the county, it would be a much more efficient use of tax funds to simply subsidize a portion of the employee’s mortgage or rent. Of course, housing would be more affordable if less land was taken from the market by government action. Land, being a finite commodity, becomes more expensive as it becomes more scarce.
The bottom line, so to speak, is that Fairfax County’s leaders made bad decisions about getting into the housing business and now the taxpayers will pay the price. Interestingly enough, the politicians who made the bad decisions are unlikely to pay any price. Sadly too many county voters seem to be of the mindset that intentions rather than results are what count and we all have to pay for that.
Thank you for the information. I am attending the budget meeting tonight in Reston to let my supervisor know they have failed miserably in managing the budget and expenditures.