Bacon's Rebellion

Democracy Thrives in Sunlight

Haywire in Haymarket

—

by

James A. Bacon
in

Town of Haymarket revenues and expenditures.
Town of Haymarket revenues and expenditures.The green bar shows net surplus/deficit.

Looks like Petersburg is not the only Virginia jurisdiction to close the 2016 fiscal year with a deficit. This chart comes to Bacon’s Rebellion by way of Haymarket citizen Robert Weir. Haymarket, a town of less than 2,000 people in Prince William County, overspent by $789,000 — equivalent to a quarter of its revenue.

Writes Weir: “It is not beyond the realm of possibility that in the coming years many of the smaller jurisdictions may prove to be an ever increasing drag on both the larger jurisdictions and the State as the financial woes rapidly expand.”

Virginia has dozens of towns, most of them tiny like Haymarket. Is there any sanction if they run deficits, a violation of the state constitution? Is anyone paying attention to what’s going on?

— JAB

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20 responses to “Haywire in Haymarket”

  1. Andrew Moore Avatar
    Andrew Moore

    Interesting thread. It reminds me of the predictions coming from Chuck Marohn at strongtowns dot org, that many (most?) jurisdictions are on a path to fiscal insolvency. It’s not a matter of “if,” only “when.”

  2. Mom Avatar
    Mom

    Mr. Jefferson might forgive your math skills only if you graduated with a liberal arts degree. $789,000 is 38% of the revenues.

  3. LarrytheG Avatar
    LarrytheG

    re: ” “It is not beyond the realm of possibility that in the coming years many of the smaller jurisdictions may prove to be an ever increasing drag on both the larger jurisdictions”

    indeed but where are they getting that money from – and what are they wasting it on?

    folks would like to know. roads, education, what?

    1. Mom Avatar
      Mom

      Their revenues come from the usual mix of streams, taxes, fees, Federal/State funds and rental income. The over ambitious revenue projections for FY16 fell far short however as the Town only accrued $2 million of the budgeted $3.5 million in revenues. The shortfalls were in things like cigarette tax revenue, recovered costs, Federal and State grants and rental revenue.

      As to what the monies were spent on, 48% growth over the past two years in administrative staff wages and benefits without a corresponding increase in a revenue stream. The legal bill more than tripled going from an average of less than $40,000 annually to around $150,000 (largely for vindictive measures, litigation with no change of success, etc., etc.). And then there are the consultants, consultants and more consultants. Renovating the third building in eight years for the police department. Unneccessary rewrites of the Town ordinances to allow for vindictive measures against residents and businesses. Thousands spent on a rewrite of the proffer language that was effectuated one month before the General Assembly eviscerated them, Renovating Town Properties that were then leased to the businesses of family and friends. The list goes on and on.

      All done with little notice, transparency or deliberation.

      1. LarrytheG Avatar
        LarrytheG

        that’s a pretty big swing for one year…unless it was going on in the prior years and just blew up …

        750K … is not that hard to get to with things like legal and it points out how the smaller govt entities are more vulnerable to fairly typical big ticket costs.

        but it also points out – that this is the easiest level for citizens to hold their govt accountable.

        Is that happening? Are their folks running against the incumbents this fall?

        1. Mom Avatar
          Mom

          The swing came largely as a result of easily foreseen circumstances with regard to rental income and grant funding (something that was pointed out to the Town Council in the spring of 2015), circumstances they chose to ignore. The legal expenses are almost exclusively the creation of the Mayor and former Town Manager. Prior to this administration the Town’s legal expenses never crossed the $40,000 threshold, now they average $120,000 as the Town now requires legal advice on every issue down to deciding whether to stock the bathroom with single or double ply toilet paper. Of course the situation is exacerbated by legal counsel that is seemingly bent on developing a municipal practice empire and has created similar problems in other jurisdictions such as the Town of Culpeper.

          As to the residents holding them accountable, not anymore. Previous councils kept their thumb on the Mayor but two years ago the fiscally responsible members threw their hands up and chose not to pursue re-election as the petty BS, lies and personal attacks that extended to family members became too much. The rest of the residents have largely grown weary of the pettiness and vindictiveness and focused on jobs, youth leagues and mowing the grass. The residents largely don’t volunteer any longer, the businesses are suffering under new ordinances and a renewed focus on making the Town a glorified speed trap (driving customers from outside the Town away).

          The May elections provide stark evidence of this in that of nearly 1000 registered voters, only 51 bothered to show up and most didn’t know the elections were even being held as there was no publicity. Even those who know what is going on are reluctant to “waste” their time trying to correct the situation as legal counsel employs the most tortured interpretations to justify what the Town does or wants to do. Add to that a fear of retribution or perhaps having the PD follow one around, and you have a recipe for disinterest and disaster.

          Of course if the Town continues down this fiscal path, that will likely change when the fiscal issues reach critical mass. Nothing engenders sudden public interest more than the threat of a massive tax increase. Given that the only reliable revenue stream for towns is the real estate tax, that is the most likely source of needed additional revenues. Unfortunately with only about 500 properties, the current situation would require an increase of roughly $1000 annually and that might not be enough. Bear in mind that the Town residents and businesses pay separate real estate taxes to both the Town and County and thus already face a high real property tax burden.

          1. LarrytheG Avatar
            LarrytheG

            this statement: ” Their revenues come from the usual mix of streams, taxes, fees, Federal/State funds and rental income. The over ambitious revenue projections for FY16 fell far short however as the Town only accrued $2 million of the budgeted $3.5 million in revenues.”

            seems a little in contradiction to this one:

            ” Nothing engenders sudden public interest more than the threat of a massive tax increase. Given that the only reliable revenue stream for towns is the real estate tax, that is the most likely source of needed additional revenues. ”

            that’s why I originally asked what the source of revenues are – because from one year to the next – real estate taxes are pretty stable – don’t usually drop (except during the great recession).

            here’s another curious thing – the website is:

            http://www.townofhaymarket.org/

            instead of the one used by most in Va which end in “.va.us”

            looking in the budget – do not see any smoking guns… hmmm

    2. TooManyTaxes Avatar
      TooManyTaxes

      Absent the control over land use and closer handles on elected officials, it makes no sense for a town (versus a city) to exist in Virginia. Residents and businesses pay a full share of county real estate taxes, plus their own town taxes. They also have responsibility for their own local streets.

      1. Mom Avatar
        Mom

        “real estate taxes are pretty stable” is exactly the point. While dramatic swings in other tax revenues are infrequent, they do happen. With real estate taxes there is a near certainty with regard to revenues derived as the rate is set with the assessed value as a know quantity. It’s almost impossible to screw that budget line item up as it is virtually idiot proof.

        You generally won’t find a smoking gun in a proposed budget as it does not go into fine enough detail. The smoking gun is usually found in the P&L figures or the ensuing CAFR.

        1. LarrytheG Avatar
          LarrytheG

          mom – still – if you go back and compare the last 3 budgets at the top line levels – it’s hard to see any big swings…

          they have such a small budget that something simple like one additional lawsuit or a dead dump truck, etc can mess things up.

          the smaller outfits – per other discussion here about capital facilities – tend to not save ahead accrual style for things that are going to get old and break.. and so when they do it rolls down into their operational budget.

          still – all in all – voters in Haymarket have TWO choices – one is to pay higher taxes – the other is to cut services.

          that’s a choice … when things go sideways.

          Now – if there is actual malfeasance – then you deal with them with the law or you vote them out – but you’re still stuck with those two bottom-line choices.

          really the same choices many of us have as individuals when some big ticket item goes belly up – and we have to come up with several thousand dollars that we may not have saved ahead for.

          1. Mom Avatar
            Mom

            Again, that is where an analysis of top line budget figures isn’t enough to give a true picture. The only way to get a clear picture is to drill down on the more detailed P&L or if you can wait, the year end CAFR.

            Which of the two option is exercised in any particular jurisdiction is largely dependent on how engaged or disengaged the local population has become. My impression is that most households, in NOVA at least, are so consumed with juggling multiple careers and things like athletic leagues that they have little time to expend on keeping up with local government issues and actions. That is of course until the local government moves to take a noticeably larger chunk out of their wallets. Citizen interest will grow in direct proportion to the increase in taxation. Is that the best construct for governance, absolutely not but it does provide some manner of backstop against over reach.

      2. LarrytheG Avatar
        LarrytheG

        there are different levels of urban services available that could include things like trash pickup – street lights, EMS, local police, etc and it truly is up to the people who live there to decide what they want or not and to elect people who will actually represent them.

        Now – that does not mean if some don’t want the service and some do – that the folks that don’t should prevail and that’s what you’ll hear in some places from some people who basically are in the minority about taxes and services and want to advocate strongly for what they want – to the point where, in some cases they’ll claim that the town is being fiscally irresponsible.

        Heck you have folks making that same argument in counties, at the State and even the Federal level for that matter.

        Further – yes there are actually jurisdictions that have fiscal issues – perhaps some of them due to their own irresponsible practices but that does not mean that govt – in general is any more prone to “failure” than say Kmart or Blockbuster Video or the thousands and thousands of other business “failures” that occur all the time.

        the theme that failure of some means the larger concept of govt (or business itself is a failure just is not the reality.

        Talk about your false narratives!

        1. Mom Avatar
          Mom

          Agreed but sometimes the failure of some does mean the failure of all. Changes in technology and the business dynamic ensured that not only Blockbuster as a brick and mortar video rental service would ultimately be rendered unto the dustbin of history but so too would all brick and mortar video rental services.

          The specific doesn’t prove the general nor does the general disprove the specific. With regard to government it is not that the failure of some assures the failure of all but rather that the failure of some may mean that the construct of a subset ensures the failure or poor performance of most in that subset. Larger jurisdictions can take advantage of economies of scale that lie beyond the reach of smaller jurisdictions, allowing those larger jurisdictions to provide services they did not previously provide both at a lower cost and more efficiently.

          If that is the case and the extension of those services into areas that were once the exclusive purview of the smaller jurisdiction renders the benefits of the smaller jurisdiction irrelevant is it unreasonable to question the need for the smaller jurisdiction. I’m not saying I neccessarily agree with rolling up the carpet and merging the jurisdictions but I am not averse to somebody making a compelling argument on a case by case basis.

          1. LarrytheG Avatar
            LarrytheG

            re: ” the failure of all but rather that the failure of some may mean that the construct of a subset ensures the failure or poor performance of most in that subset.”

            that’s a pretty far stretch to make… for anything.. I think especially when the narrative here in BR tends to assume that – and it needs some push back show it’s just not the case.

            “Larger jurisdictions can take advantage of economies of scale that lie beyond the reach of smaller jurisdictions, allowing those larger jurisdictions to provide services they did not previously provide both at a lower cost and more efficiently.”

            they can also screw up.. easier… and longer…aka Richmond, Petersburg, Detroit.

            re: ” If that is the case and the extension of those services into areas that were once the exclusive purview of the smaller jurisdiction renders the benefits of the smaller jurisdiction irrelevant is it unreasonable to question the need for the smaller jurisdiction. I’m not saying I necessarily agree with rolling up the carpet and merging the jurisdictions but I am not averse to somebody making a compelling argument on a case by case basis.”

            that is the conundrum though and people in those jurisdictions can be the reason why consolidation that needs to happen – is opposed.

            People want it both ways – actually 3 –

            they want more services, lower taxes, and not having to pay attention to how the jurisdiction is doing its business.

            It’s not that govt is fundamentally flawed in concept as one sometimes gets the impression reading here in BR.

            and lord of lords – some of the very folks who espouse liberty and the ability of the citizens to effect changes in govt – find themselves advocating APPOINTED govt for jurisdictions that “mess up”. Holy bat offal!

          2. Mom Avatar
            Mom

            “that’s a pretty far stretch to make… for anything”

            Blockbuster, Hollywood Video, Erols, did any of them survive?

            As to larger jurisdictions screwing up, that can absolutely be the case but they also generally have levels of capacity and flexibility to respond more effectively than smaller jurisdictions.

            I’m not advocating appointed government, rather, I’m playing devil’s advocate for the premise that in some instances smaller local jurisdictions may have outlived their usefulness/purpose and might be rolled up into the surrounding larger jurisdiction.

  4. Hill City Jim Avatar
    Hill City Jim

    Without looking at their budget, they could be just like Lynchburg. Build a $80 million new school, an expenditure, by issuing a bond. And hope the revenue will show up sometime.
    Live for today!

  5. LarrytheG Avatar
    LarrytheG

    Gawd forbid we do what Richmond did instead, eh?

    we talk about political will. Political will is about BOTH taxes AND maintaining your infrastructure as well as paying your bills.

    Some localities save on the tax side by allowing their infrastructure to go to hell in a handbasket. Others bite the bullet and increase taxes (and/or cut) because they feel they must and the 3rd group? they borrow the money but don’t raise the taxes to pay it off.

    that group – face consequences not only from Richmond but from the bond folks who will make sure all lenders know of their non-payment record.

    let’s also point out – that in the news on a frequent basis – up our way – are people living in stand-alone communities with private sector water and sewer – and the uproar is nonstop. They cry about the ‘bad’ water AND at the same time about the HIGH water rates AND who do they run to ? Well, the government of course to “make” their private sector water company – give them good quality water for less money!!!! geeze – What a CONCEPT!

    I guarantee you – if you took a poll of people in these communities about the wonderfulness of the private sector in doing better than government – you’d get quite the reaction…… Many of them actually petition their local govt to take over their system.

  6. LarrytheG Avatar
    LarrytheG

    I’d hope that Bosun would weigh in here but it should be recognized exactly what independent towns really are – and that is – urban services districts.

    In theory -they’d provide more and better urban services than the counties around them – provide.

    that’s even true for non-independent towns found in the other states – it’s the same basic issue – urban services.

    Virginia actually permits a number of different mechanisms to provide urban services – including service districts and regional authorities.

    these are things like grid streets, sidewalks, central water/sewer, streetlights, fire and rescue and police in addition to county sheriff.

    the trouble with places like Haymarket is that the counties around them have grown and evolved and are also now urbanized and also provide some of these same services and there is overlap, redundancy and duplicative administration.

    So they started out providing a need that was not provided and they evolved to where the counties around them are now doing that also.

    I would not characterize this as a failure of govt but evolution to a point where – like many companies -pruning is required and this is where the private sector can differ from govt – although not always.

    there are companies that are themselves big and bloated with a lot of overhead – and not surprisingly – because they have virtual monopolies or provide goods and services to the govt!!!

    People also cause the Haymarket issue – because those who live in Haymarket would not want their services turned over to the county – fearing those services might be changed or degraded and that they’d have less influence over them.

    If you don’t believe that – look at all the school systems in Virginia and how many of them have consolidated and cut duplicative administration? James City/Williamsburg – who else?

    so this is not necessarily malfeasance of the first kind …. perhaps Mom can further persuade but again – even if it really is – what happened to the “the closer govt is to people the more accountability” concept?

    1. Acbar Avatar
      Acbar

      But, Larry, faced with a huge tax increase, might (and should) Haymarket’s 1000 registered voters reach the alternative conclusion that the Town of Haymarket should give up its charter and revert to County services (and taxes)?

      1. LarrytheG Avatar
        LarrytheG

        @Acbar – unless money was absconded with or spend on truly corrupt things – one presumes it went for some kind of urban services… which would include legal if they were trying to enforce proffers to require developers to provide, in essence, impact fees – which if you think about it is to protect taxpayers.

        So what it boils down to – is what services would you lose…. or you’re willing to part with in exchange for less taxes?

        it’s not as some assert that govt itself is somehow fundamentally flawed and subject to fail…

        and I’m not one opposed to the private sector providing services – at all… even fire service but one of the essential issues is well illustrated with fire service.

        can it be an optional service were some choose to not have it?

        ditto with street lights or sidewalks or water/sewer, etc…

        some of these – maybe like trash service might be optional but obviously what exactly is someone going to do with their trash if they choose to not have service?

        You know what they do. You see signs on commercial business dumpsters that say ” no household trash” so you’ve got a group of folks who basically don’t want to pay for services and will put those costs on others if they can.

        in terms of a town reverting – Virginia lacks a important govt function for a good many but not all jurisdictions and that is the ability of citizens to initiate referenda and that, in turn forces change through elections but at the end of the day – if people can’t and won’t change govt at the really, really local level – like a town of 2500 people – then I can’t generate a whole heck of a lot of outrage about their plight….to be honest.

        You’d think in a town of a couple of thousand that the will of the voters would be child’s play, right?

        I’m amused these days. This country was formed on the premise of one-man-one-vote – to be self-governed by people deciding what they wanted govt to do and not – as opposed to having govt appointed by some unelected king.

        but we seem to have gone off the rails today – politically.

        we have folks who actually want “A” guy who will “decide” …
        would these be the same folks complaining about their localities today doing things they don’t agree with?

        like I said – I’m amused… we’re not “opposed” to “government”.

        😉

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