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The choice: The goose, or its golden egg

June 27, 2008 12:15 am

THE AXIOM suggests that killing a goose in order to eat today is a good idea. But what if the goose lays golden eggs? Which choice is better in the long run?

Stafford County has forged ahead in wages and local job growth by fostering the growth of businesses. Now, however, it stands at the crossroads in deciding whether the success of the past will be encouraged in the future.

Why should anyone besides business owners care what happens to business?

I suggest that there are two types of people who should care about business: Those who work for a living and those who care about anyone who works for a living.

The financial well-being of our families is directly related to our economy. That is why the mission of the Fredericksburg Regional Chamber of Commerce is to "facilitate healthy economic growth." Healthy local economic growth has resulted in nearly 1,200 chamber members--businesses who employ almost 40,000 people.

At a Stafford roundtable in January, Stafford County Board of Supervisors Chairman George Schwartz wisely said that an "ad hoc approach to taxes can lead to inequities." He indicated that a Business, Professional, and Occupational License tax should be considered only as part of a comprehensive review of revenue. Other supervisors have said as much to their constituents.

At the same January discussion, Stafford Supervisor Paul Milde noted that when jurisdictions negotiate with new businesses, one of the first concessions made is a reduction in local taxes. Without the BPOL tax, Stafford has a natural advantage in attracting business. As a result, business now pays 30 percent of Stafford's total revenue.

In fact, Stafford County is one of the leaders in Virginia in developing jobs through a business-friendly environment. From 2002-07, Stafford has had the fourth-highest growth rate of businesses in the commonwealth.

But the success does not end there. Stafford also had the third-highest growth rate in employment. Think about that: These are what are known as "in-place" jobs. That means jobs within the county. These are jobs that limit or eliminate long commutes. Shorter commutes mean less highway congestion and better air quality. Local jobs allow for more quality time with families.

"Aha!" you might say. "Are the local jobs paying the same as the old jobs at the end of the long commutes?" The answer is that wage growth in Stafford during that same time improved to the fourth-highest in Virginia!

GOOD JOBS, TOO!

"How can that be?" Again, during the same period (2002-07), Stafford County ranked first in growth in professional, scientific, and technical services among all counties and independent cities with 500 or more workers in this industry.

Stafford had 2,285 workers in the professional, scientific, and technical sectors as of the second quarter of 2007. That is a remarkable 16.1 percent increase during the previous five years.

"Oh, but surely the economy has turned, right?" Certainly some segments are down, but as of February of this year, the unemployment rate in Stafford was just 3.2 percent. Among the 134 counties and independent cities of Virginia, Stafford County ranked 11th in that category in February. Over the last 16 years, Stafford has averaged 1.1 percentage points below the state unemployment rate.

Stafford achieved these enviable levels at the same time Forbes Magazine declared Virginia the best state in which to do business. In fact, Forbes declared Stafford County as "The Best Place to Get Ahead."

But all of that good news may come to an abrupt end.

In 2008, business assessments shot up a remarkable average of 28 percent, or $3.7 million.

If Stafford had enacted a BPOL last year, using Spotsylvania's rates, the increase would have been only $3.4 million. So business taxes have already increased by more this year than the proposed BPOL.

To make matters worse, 2009 real-estate taxes were modified upward by 20 percent to offset declining personal real-estate assessments. While personal assessments went down, business assessments went up. That means business taxes went up 28 percent because of assessments, and then that tax bill was increased by another 20 percent.

Compounded, real-estate taxes on business are rising an incredible $7.0 million, which is a crushing 54 percent jump in just one year (128 percent times 120 percent).

Schwartz publicly stated that he would consider a BPOL tax only as part of a comprehensive review of Stafford's tax rates. We call upon him to honor that promise and ask for a comprehensive review of local taxes. For example, to pass a BPOL tax, state law would require the existing merchant's tax worth $800,000 to be eliminated by the county.

Will your job or a loved one's job be at risk if BPOL is passed? We cannot know for sure. Is passing BPOL a plan to keep economic success in Stafford? Absolutely not.

Given the devastating increase to business in real-estate taxes alone, it seems clear that Stafford County cannot afford a BPOL tax.

Bob Hagan is president of the Fredericksburg Regional Chamber of Commerce.