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What
is a fee and what is a tax?
That is a question that may – and perhaps
should -- dominate political campaigns this year.
Incumbent
General Assembly members who campaign on having kept
their pledge not to raise taxes may be asked about
fees instead. Voters
are going to notice higher fees for driver licenses,
boat registrations and college tuition, higher ABC
store prices, new parking charges for bird watchers
and a new $9 fee for every commercial pump or scale
inspected by the weights and measures division.
Water
permit fees are about to triple, and the state is
renewing the collection of royalties for piers
standing over state-owned river bottoms.
The
2003 budget bill now sitting on the governor’s
desk includes $66 million in new fees over two
years, according to a summary from the House
Appropriations Committee.
Most of those fees were proposed by the
legislature, not the governor.
Doesn’t
sound too bad? Don’t
forget that the 2002 General Assembly working on the
same two-year budget imposed $211 million in new or
higher fees. So
the cumulative total is sneaking up on $300 million. When they go into effect for a full two-year
budget cycle, the total will easily exceed $300
million.
The
game here is simple. You
create or raise a fee for an existing program, then
you use the general fund tax dollars previously put
to that purpose for something else.
The
Division of Motor Vehicles has been the blue ribbon
cash cow. DMV’s
fees were raised $60 million in 2002 -- but not
because it was short of cash because of the
recession. DMV’s operations were slashed, offices
closed and employees laid off so its fee revenue
could be diverted to the General Fund for other
programs.
The
reaction among legislators, especially Republicans
who felt their local DMV offices were targeted, was
angry and swift. Restoring
full DMV service became Job One of the 2003 Session.
But there has been little attention on how it was
done.
The
General Assembly didn’t stop the bleeding in order
to re-open DMV field offices, it raised license fees
another $15 million. Peter was fattened for the
slaughter, got robbed to pay Paul, and then you got
nicked to repay Peter.
The
list of new and raised fees doesn’t include the
tuition increases at Virginia’s
institutions of higher education.
If anything is a fee for a government
service, state college tuition is.
But, of course, the General Assembly doesn't
raise tuitions directly; it lets the boards of
visitors do the dirty work. Accountability gets
hazy.
So,
the figures on the handouts are conservative.
That doesn’t mean the public policy is
conservative. A
dollar out of the family budget or a business cash
register to pay a state fee is still one less dollar
for discretionary spending.
The economic impact is the same as a tax.
In
truth, there is no appreciable difference between a
tax hike and a fee hike if you're paying the fee for
something you really must have, like a driver’s
license, college degree or a health inspection.
The main
difference for you as a citizen is that you can
itemize state taxes, but you can't deduct fees from
your federal taxes. In other words, if you itemize,
you wind up paying more in taxes than you would have
otherwise.
Some
fees
are related to the courts, and if you don’t get
charged with drunken driving or failure to appear in
court, you won’t have to pay them.
Some are voluntary, in the sense that you
don’t have to buy a bottle of Old Overcoat at the
ABC -- or have the option of crossing the state line
or finding a neighbor who can shop on a military
base. But for many Virginians, there's no escaping
the fees.
The
2003 General Assembly did approve a bill that may
lead to better reporting of state fee income.
House Bill 1393, submitted by Del. Scott
Lingamfelter, R-Woodbridge, requires reports every
six months listing all income from all sources.
It also tells the Auditor of Public Accounts
to report on whether fee revenue is diverted to
other purposes. We’ll
see how that second part works out, but it is a
great idea.
Another
great idea sponsored by Lingamfelter wasn’t so
successful. His
House Bill 1849 would have done a bit of editing on
the state code, changing the word “fee” to
“tax” with regard to any mandatory payment
related to business activities.
That
proposal was tabled 15-1 in the House Rules
Committee. Instead,
the legislature should have amended the bill to
apply the term “tax” to any mandatory state fee
related to any activity, and then passed it. Then we could have opened this year’s
debate about raising taxes in Virginia
by admitting we already had.
--
March 10, 2002
Selected
Fee Increases
(2002-2004
fiscal years) |
Increase
Hazardous Waste, Solid Waste, and Water
Program Permit Fees |
$6,200,000 |
|
|
Increase
Stock Corporations Registration Fees |
31,000,000 |
|
|
ABC
Prices |
21,154,000 |
|
5
percent increase |
Establish
Deed Processing Fee |
41,040,000 |
|
$10
fee |
Motor
Vehicle License Reinstatement |
4,050,000 |
|
$15
increase |
Motor
Vehicle Records Transaction Fee Increase |
20,000,000 |
|
$2
increase |
Motor
Vehicle Fee for Jamestown Celebration |
7,500,000 |
|
Mandatory
$1 (no longer the optional $2) |
Court
Filing and Processing Fees |
50,702,868 |
|
$12
increase criminal, $4 increase civil |
Court
Fee Increases for Legal Aid |
3,514,000 |
|
$2
increase to $4 |
Motor
Vehicle Registration Fee Increase |
30,000,000 |
|
$2
increase |
Drivers
License Fee Increase (2002 Session) |
10,200,000 |
|
60
cent year increase or $3
(5 year license) |
Drivers
License and ID Fee Increase (2003 Session) |
10,600,000 |
|
$1
per year increase or $5 (5 year license) |
Weights
and Measures Inspection Fee |
1,000,000 |
|
$9
per device |
DUI
Fees |
2,900,000 |
|
$100
increase |
Park
Fees |
480,000 |
|
10
percent increase |
Increase
Fee for Speeding Violations (funds to literary
fund) |
9,409,400 |
|
$2
per mile increase |
Fee
for DNA Samples (SB 419) |
614,000 |
|
$25
for convicted felons |
Notary
Fee Increase |
800,000 |
|
$10
increase |
Boat
Registration Fee |
1,973,724 |
|
$3
per year increase |
Inspection
of Non-Restaurant Food Establishments Fee |
797,220 |
|
$40
fee |
Drinking
Water Inspection Fees |
2,040,000 |
|
Fee
to cover costs of inspections |
Increase
Vital Records Fee |
400,000 |
|
$2
increase regular, $12 increase expedited |
Construction
Permit Inspection Fees for Wells and Private
Sewage Systems |
1,035,000 |
|
up
to $37.5 |
Annual
Permit Renewal Fee for Food Establishments |
867,000 |
|
up
to $40 |
--
March 10, 2003
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