RVA Politics is a blog about politics in the state of Virginia And the capital city of Richmond.

The author is a political scientist. Please don't hold that against him.


Meals Tax: Best of Bad Options

Meals Tax: Best of Bad Options

Last night, the Richmond City Council essentially announced their intention to implement the Mayor's proposed meal tax at their regular meeting next week.

For those who have avoided RVA restaurants the past few weeks: Mayor Levar Stoney has called for the Council to increase the city's tax on dining out, from 6 to 7.5%. The increased funding should provide enough extra money for the city to borrow $150M to pay for new schools.

Many restaurant owners, understandably, are opposed. And in general there’s a lot of opposition to new taxes, especially in light of frequent complaints about the city’s high tax rates in general. The debate over the meals tax comes at a crucial time for Richmond government and the city schools, with new leadership wrangling over how best to fund new facilities for a neglected system.

Opponents have good reasons to be concerned about the Mayor's proposal. But there are two ideas that I’ve seen being circulated, particularly by opponents, that I want to counter.

1. Find savings elsewhere

Opponents complain that Richmond government spends too much money. We shouldn’t have to add new taxes to pay for schools, these folks claim; the city just needs to do a better job spending the money it already has.

It's a nice idea. But government budgets don’t work that way. Everyone thinks you can just sit down, make a list of obviously wasteful and bloated departments and functions, and just cut them out. (I think this scene was one of the reasons why the movie Dave was popular – but also why that movie is such a fantasy.) But city departments and functions all arose in response to a need from the city’s residents, and they all serve those residents in some way or another.

If you just cut funding to city departments, they will need to cut back on services. That includes quality of life stuff like trash pickup and grass cutting, but also health clinics, social services, and long-term development efforts like Community Wealth-Building. They may have to lay off workers (not great for the local economy either).

Maybe you think this would be a good thing; that you can do without city services. But calls for city offices to "tighten their belts" usually fall first on our most poor and vulnerable residents. In a city where inequality reigns and the Mayor’s call for "one Richmond" is still very much an idea, this presents big practical and moral problems. But even if this inequality wasn't true (or if you don't care that much about others), do you think the city would do so well in attracting young millennials if it cut funding for parks, arts, and police? City services, even for middle class residents, are what make cities great places to live; cut the services, you cut the reasons for staying.

Sure, more efficiency would be great. Guess what? The Mayor is already working on it – that’s the whole point of last year’s performance review and administrative restructuring. I have great hopes for this effort to make the city more effective and serve people better, and I hope new RPS Superintendent Jason Kamras will undertake a similarly transparent process to reform the schools bureaucracy. But no efficiency effort will generate millions of dollars in the immediate future.

One thing to keep in mind: bureaucracies are inefficient, by their very nature. Large, complicated tasks require large, complicated administrative structures, and these will always contain a certain amount of waste. This is true in the public sector, but also in the private sector; we tend to overlook how overpaid CEOs and too many middle managers are built into the price of many of the things we buy, from electronics to health insurance.

To pay for better schools, there is no magic budget cutting process that will create the millions necessary to start building. The city needs more revenue. And so it needs to increase taxes.

2. We Need Comprehensive Plan

Even from those residents who accept this need for more taxes, some worry that the mayor's plan unfairly falls on restaurant owners and patrons, when we should look to multiple revenue sources. I’ve seen many calls for the city to spread the pain: "let’s add a smaller meals tax increase, plus other taxes on real estate and cigarettes!"

That might be a fair solution. But it's political suicide.

Every tax is a political fight. You think restaurant owners are putting up a lot of opposition? How about if we add realtors, property owners, cigarette smokers, and one of the city's biggest corporations? That's not a plan for fair revenue sharing. That's a plan to build a coalition to stop you from getting anything done at all.

Make no mistake: the meals tax was the best idea on a list of bad ideas. It’s the least worst option that Stoney could find.

A related complaint I've seen is that the Mayor's tax doesn’t go far enough; it doesn’t fully fund the school facilities plan that the School Board adopted last year. These opponents point to the full plan, and a recent voter referendum that supported schools, as reason to look for something better than this meals tax.

I'm not going to go too far into the referendum here. But I’ll just remind citizens that it is a classic example of symbolic politics. It actually requires very little of the mayor; it explicitly prohibits the tax increases we will most definitely need; and it even requires the General Assembly to implement it. Yes, I voted for it; I like schools too. But city residents shouldn’t expect the referendum to bail them out of having to make hard choices.

The city schools are at a crisis point. As I’ve argued before, they are the single most important issue facing the city, and inaction or failure on the issue threatens every good thing that’s happened to Richmond in the past few years. If we fail our schools and the kids in them, we fail Richmond.

We need better schools. We need money to pay for them. We need new revenues. We need new taxes. That’s it.

We cannot solve this by looking through the couch cushions, or making everyone be better at their job, or by waiting for the grand plan that will solve everything. It requires hard political choices, with winners and losers. And we need to make those hard choices. Right now.

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