Remember the sales tax increases for hotels and restaurants, supposedly meant get extra cash from tourists? Well, they have crept into localities with little or no tourism. Sales tax in many localities now adds a quarter to the price of a kids meal at your favorite fast food joint and fifty cents to your daily lunch tab if you eat out. I would submit that a lot more kids meals and restaurant meals are sold to local folks who don't have time to cook or pack lunches than to tourists. (Shouldn't locals be able to show a local ID and be exempt from the "tourist" taxes?)
While politicians proclaim publicly they want no new taxes, the budgets show increased taxes and fees and manipulation of dedicated funds on a routine basis. Semantics? Is raising the annual registration fee for a small utility trailer from $7.50 to $18.00 a new tax? It's more money out of the resident's pocket, so like an increase in the income tax, I would submit it is a new tax.
Is taking millions from supposedly dedicated funds to supplant (replace) general funds a new tax? It does mean the "user fees" placed in the dedicated fund have become "taxes" supporting the general fund instead being used for the original dedicated purpose. It also means the original dedicated purpose of the funds goes undone or is done to a lesser extent that expected. To add insult to injury, the user fees on dedicated funds are being increased, then raided to supplant general funds. How is that not a new tax?
A good example here in Virginia is the Salt Water Fishing License. Sales of licenses generate over 2 million dollars per year. These funds are supposed to be used to enhance recreational fishing opportunities, research related to recreational fisheries, and other user centric purposes. The only general fund use specified in the law is "enforcing the provisions" of the license laws. Since enforcing the license only entails looking at decals on the side of a boat as the officer cruises by or asking to see a fishing license while checking fish numbers, sizes, and species for legality; it is not real expensive. It is more an additional checklist item than an enforcement activity requiring dedicated staff and equipment like it takes to catch poachers and criminal conspirators who catch and sell fish illegally and under report catches to evade quota restrictions. Yet the state budget manipulators have reallocated $800k of the fund for "enforcement", basically to avoid layoffs in the face of dwindling general funds. (To the credit of the state, a large portion of the 2009 allocation was slated to be restored to the fund due to fuel and other operational savings.) However, the point is the fund was deliberately manipulated to supplant general funds. A license fee increase is slated for 2011 which will provide as much as another million dollars to raid.
Previously, the state has also used the recreational fund as a source of money to fund research required by regional and federal fisheries regulations. That sounds good, except the fish being monitored are also caught by commercial fishermen, and in greater numbers. Yet there is no corresponding commercial contribution to the costs. Another zinger: anglers pay federal excise tax on fishing tackle and that money is apportioned to the states based upon the number of recreational fishermen in the state. The state is required to pay a match in order to get the federal funds. What does Virginia do? They take almost 50% of the the match from the recreational fund and the rest is "deducted" from research grants to VIMS and ODU, the primary recipients of the federal grant money (and the recreational match.) So the anglers pay the excise tax on the tackle, then pay the state an additional amount to get the grant money. And the anglers never see the grant money for any purpose they approved. This is big money --- over 2.6 million dollars a year and a partial match of over $320K is paid by the recreational anglers. See the details at http://www.mrc.state.va.us/vsrfdf/pdf/0608-03App_C.pdf. The federal law says the money must be spent in certain ways, including access improvement, artificial reefs and other "angler friendly" uses. A table showing the required allocation is found at http://www.asafishing.org/government/wallop_breaux.html Virginia uses all the money from salt water anglers for ongoing fisheries research, callously ignoring that the research benefits commercial fisheries, too.
Before you get the impression that I am against commercial fisheries, let me emphasize that I am not. Most of us, myself included, want seafood in markets and restaurants, and it would not be there without commercial fisheries. So I am 100% OK with commercial fishing when it is managed sustainably. What I am ranting about is the unfair burden placed on the recreational sector to support research which benefits commercial fishing, too. The state has chosen to subsidize commercial fishermen in several ways The main subsidies, apart from the funding of this required research, is that their equipment, boats and vehicles are exempt from property tax; and, they are not required to have business licenses. As a businessman, I am envious of those perks! If the general assembly wants to subsidize the research required for commercial fisheries, they should use general funds, not money taken from recreational fishermen which was originally earmarked for uses exclusively beneficial to the recreational sector.
I may have digressed a bit. However, the license fund example illustrates the effrontery of our political leadership in telling us no new taxes while manipulating the tax and fee structure in ways that are not readily apparent to the general public.
In Virginia, the Budget Bill essentially can override any other law. That is how the money from dedicated funds can be shuffled in defiance of the spirit and intent of the original legislation. A state constitutional amendment to prevent such manipulation would be appropriate. In that way, the original legislation would have to be revisited before the funds could be taken to supplant general funds. This would add some transparency to the proposed diversions.
As far as fee increases, most are reasonable and are in line with inflation. Even so, they are new taxes, largely excluded from the scrutiny that a general income or sales tax increase would generate.
Rather than manipulate funding like this behind the scenes and with little or no public input, why can't the politicians just be honest about the needs and take the issue to the public in the form of a general income tax increase? I would rather see a highly visible 1% increase in the income tax rate than to have to pay it with increased fees or to have dedicated funds diverted from their intended purposes. With a general tax increase proposal, we would find out if the people are willing to fund the services, and if not, the state should curtail them.
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