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Volume 11, Issue 2, February 2005
3710 S Street, NW, Washington, DC 20007
(202) 338-5164 phone/fax
Nationals' Opening Game Tickets Are Hot Items
April 22 Hearing on Exploration Committees' Donor Report Requirement
Officers and Board
The President's Corner: Carroll Green
Who Collects Telecommuter Taxes?
Another Innovative Tax
DC Tax Relief Programs
Inquiring Minds May Want to Know
Increased Property Assessments
Federation Assembly Meeting Dates
FEDERATION ASSEMBLY MEETING
Tuesday, March 22, 2005
Speaker: John Ross,
THE CHARLES SUMNER SCHOOL
MPD Chief Charles Ramsey predicted in late February that the District and its contract firm, ACS State & Local Solutions, will add at least ten red-light cameras to the 39 already in place at city intersections. Reportedly, the city has contracted to pay more money to the company if it generates more citations. There have been police and official claims that the existing cameras are in place, with more to come, due to popular demand. Most of us have yet to see a friend or colleague demanding any, some, or more traffic cameras. For those who do have such preferences, the "no atheists in foxholes" dictum is apt to hold. After the first camera-generated citation and whopping fine, attitudes tend to change.
It is generally conceded that the traffic cameras are primarily a revenue generating device (the AAA said it first), and not at base a safety initiative.
Nationalsí Opening Game Tickets Are Hot Items
General admission tickets are to the April 14 opener game of the Nats as single hits are to grand slams these days. Scarce. A lottery is being talked about for the few thousand available tickets, to start at about the time of this printing. Some tickets reportedly will go on sale March 26.
Season ticket and partial-season ticket buyers receive tickets to the home opener as part of their package arrangement, and can buy additional tickets to the first game. Mucho tickets are expected to be given to supporters and others on the clubís VIP list. All this is great for image for the new Washington team, and the club managers seemingly are playing their PR cards just right. At least one Federation Board member has his opener tickets already. Good luck to everyone else.
On the civic side, junior baseball leagues of the Little League and Babe Ruth League type are hoping the big-baseball Nationals will take an interest in the mostly inner-city kids teams that make up the two youth leagues, who could use skill-building and role-model contributions from the big boys. We hope it happens, for the good of everyone concerned. Reportedly, the prospect looks good, and contacts have been made.
April 22 Hearing on Exploration Committeesí Donor Report Requirement
The various potential candidates for mayor who form exploratory committees are not required at present to reveal the names of their contributors. The city council recently voted on the issue in the form of emergency legislation to require disclosure. The measure failed by a single vote. However, the Washington Post reports, several councilmembers said that, on reflection, they might support disclosure after a public hearing on a permanent bill on April 22 .
The Presidentís Corner: Carroll Green
While awaiting my turn to testify before the Councilís Committee on Economic Development, I listened to industry representativesí declaration that deregulation of the utilities in the District of Columbia is working very well.
PEPCO and Washington Gas and its subsidiary, Washington Gas Services, Inc., purported that DC consumers have choices, that there is competition in the city, and that about six percent of consumers are indeed exercising their choice of suppliers. It is quite clear that the industry does not tell the whole story on deregulation, the shell game that deregulation has become, and that choice and competition in DC are illusional, simply misleading.
We are aware of instances where consumers have switched to another supplier at a lower rate, only to have a rate increase affected subsequent to the switch, inordinate delays (months) to switch suppliers; and suppliers routinely refusing to accept new customers. In the telecommunications industry, one long distance supplier informed local consumers that if we wanted to continue to receive a single bill from the local provider, we would have to pay an additional $1.75 a month. The Office of the Peopleís Counsel has been quite busy mediating these types of consumer complaints.
Under questioning by Chairman Ambrose, PEPCO admitted that the city of Alexandria is interested in the land under their coal-fired generating plant on the Potomac, in northern Alexandria, which provides most of the electrical power for downtown DC and Georgetown.
It appears that Alexandria is willing to give PEPCO a period of about seven years to shut down operations at the generating plant. PEPCO agreed with Ms. Ambrose that the company probably would not succeed in keeping the generating plant in operation, given the fact that the city of Alexandria has a number of options available to lay claim to the land. PEPCO advised that there is another major facility located on the land, an electrical power substation, that would be cost-prohibitive to move and relocate.
One can reasonably assume that the cost associated with the disassembly of the substation would include land acquisition, removal of transmission lines, and the construction of a new substation and new transmission lines elsewhere. This tug of war between PEPCO and the city of Alexandria is an ominous sign for the consumers and rate payers of the District of Columbia, who will undoubtedly share in the cost of shutting down the generating plant and probable relocation of the substation.
Deregulation of utilities is clearly a boon for the industry. It has helped foster an era of creative accounting and creative pricing that have now become industry norms. It has also become painfully clear that deregulation does not work in the interest of the consumer. Approximately sixty percent of the national gas and electrical costs are directly associated with their production; such costs are now unregulated.
One does not have to be an honors graduate of Wharton to conclude that some industries should be regulated monopolies, primarily because of the infrastructure requirements for the transmission/delivery of their product to the consumer. Deregulation does not fit, in any form or fashion, the utility industry. The jury, however, is still out on telecommunications simply because of ever-changing technological advances.
During our testimony, we pressed Chairman Ambrose that now is the time to reassess the deregulation of utilities in the District of Columbia. We also urged that the council implement a municipal opt-out aggregation program, that automatically includes residential consumers and large customers, but also includes a provision for residential consumers who wish to opt out.
The municipal opt-out program is a critical element in an attempt to keep utility bills at a somewhat reasonable cost to residential customers. Currently suppliers do not appear to be interested in small residential accounts. They prefer the large governmental accounts, like Metro and other agencies. The municipal opt-out program will provide what utility suppliers consider an economically viable aggregation, similar to large agencies with predictable usage, on which to offer a bid to provide their product.
I strongly urge member organizations and citizens to make their views on deregulation of utilities known to our elected officials. It is in our collective self interest to put a harness on this gift horse to the utility industry.
At its March 10 meeting, the Federation Board of Directors:
Well, the issue had to come up sometime, and now it has. Since tax revenue is importantly involved, it is likely that the ever-watchful roving eyes of the mayor and council are on the lookout as matters unfold. The issue: to whom does a telecommuter, who lives elsewhere but does business by wire in a distant locale, owe income taxes? The National Law Journal (January 10, 2005) reports that in January New Yorkís high court heard a case of critical importance to the future of telecommuting.
"Although Mr. Thomas Huckaby of Tennessee does not live in New York, rarely visits and does virtually no work in New York, New York [State] claims that it is entitled to tax 100% of his income because his employer is based in Queens, New York City. An intermediate court held in April 2004 that the state is right (6A.D.3rd 988, Matter of Huckaby v. New York State Division of Tax Appeals)."
As the NLM smoothly puts it, "[The case] is being watched closely by states attempting to address the modern reality of telecommuting with tax codes written when the idea of telecommuting was futuristic." According to the NLW, most states resolve the issue by apportioning income. In New York, if the employee works out of state for convenience rather than employer necessity, the state claims it is entitled to tax 100% of the income earned. Some states, such as Connecticut, base their income tax on where the taxpayer lives rather than where the income is earned; that means some workers are subject to double taxation on their income.
This current New York gambit may be the mayorís avenue to taxing DCís many out-of-statersí District-earned income at its source -- barring Congressional ploys, of course.
Increasing use of fuel-efficient vehicles is fueling new ideas for taxing motorists. The Washington Times reports that: "A planned program in Oregon would tax drivers by the number of miles they travel instead of by the amount of gasoline they use, to compensate for an expected loss of revenue caused by . . . use of more fuel-efficient vehicles," and adds, "Officials in California and Washington also are considering imposing a mileage tax as a way to drum up more money."
The mileage fee would be computed whenever a driver gets gasoline at a service station and would replace the stateís fuel tax and compensate for a projected loss of revenue from increased use of hybrid and other fuel-efficient vehicles, Oregon officials say, according to the Times.
How to keep track? "When a person fills his gas tank, a device on the gas pump would read the in-state mileage recorded by the carís receiver and send the information to the service stationís billing system, eliminating the fuel tax and tacking on the mileage fee."
Surreal, but being considered elsewhere. (Virginia, reportedly, has opposition in the legislature.) Some cite civil rights violations, since the technology provides the potential to track a personís whereabouts. Associations and individuals will want to keep an eye out for moves toward any new tinkering with the Districtís fuel tax. A good source of additional information for the subject is the AAA.
Homestead Deduction: DC Code 47-849. To qualify, you must own and occupy your home as your principal place of residence. The deduction reduces your taxable assessment by $38,000.
Senior Citizen Property Tax Relief: D.C. Code 47-863. To qualify you must be 65 years old; own and occupy the property as your principal place of residence; own 50% or more of the home, and the total adjusted income for all people living in the home, except renters, must be less than $1,000,000 for the last calendar year.
Owner-Occupant Residential Tax Credit: DC Code 47-864. Limits the annual increase in your residential real property taxes, if you receive the Homestead Deduction. Your tax bill cannot increase more than 12% in one year, no matter how much your property assessment increases. Properties that are sold, renovated, or rezoned do not qualify for this program.
Interestingly, the DC Marketing Center (1495 F Street, NW) has projected several quarterly breakfast forums, which may be of interest to Federation delegates and association leaders. The most recent one was on Thursday, February 17, from 8:00 to 10:00 a.m., and featured as speakers City Administrator Robert Bobb and Councilmember Sharon Ambrose, chair of the city councilís Committee on Economic Development. The DC Marketing Centerís Business Initiatives breakfast meetings and "designed to bring together public and private sectors in economic development in the District of Columbia." Future topics and dates are:
At the February meeting, keynote speaker Robert Bobb talked about the four "pillars" of his and the mayorís ambitious approach, namely, 1) transferring growth (spinning off benefits) from the $35 billion city core economic engine to neighborhoods badly needing development and recovery, 2) energizing a "Beautiful Avenues" program to revitalize DC entryways like Georgia Avenue and bring them to the level of results achieved by the Pennsylvania Avenue Development Corporation between the White House and the Capitol, 3) finishing the job for all of Pennsylvania Avenue, SE, especially east of the river, and 4) enhancement of economic opportunities for DC residents through a partnership between the DC government and Howard University.
The February agenda lists "Breakfast and Networking, 8:00-8:30 a.m." Providing one eats and greets reasonably fast, these functions can afford a good opportunity to pursue civic activities on a larger scale and keep abreast of activist developer thinking. For more information, the listed contact telephone is 202-661-8670.
Everyone has by this time received his higher real property assessments from the DC Office of Tax and Revenue. Some Federation Board members have found the often-substantial new evaluations anomalous in the area, as well as onerous intrinsically. Not overlooked at the most recent Federation Board meeting was the proposal in Fairfax County to reduce the property tax rate by ten cents per $100. (The District rate is 96 cents per $100.)
The taxing formula in the District is: the Office of Tax and Revenue makes actual assessments of property values, often, it is suspected, on a drive-by quick glance of the property or block in question. The basic tax rate, on the other hand, is fixed by the city council. Being talked about in the Federation is a need for a rate reduction in the District and an increase of the homestead exemption for owner-occupants to around $100,000.
The problem most often cited is that, with the current aggressive augmentation of taxable home values in the District, the more fragile elements of the population will be taxed out of their homes. The Washington Post several weeks ago noted that Habitat for Humanity homeowners are in danger of losing their houses because of inability to pay rapidly accelerating property taxes. Many formerly modestly-ranking civil service retirees are not far in advance of the assisted-homeowner element. And all of this in the face of a huge municipal government budget surplus.
One delegate succinctly observed: "Itís getting to the point where property taxes are overtaking income taxes as a matter of financial concern." Right on and right off. Itís time to adjust city fiscal needs to citizensí budget needs, diminish a rapid surplus-accumulation rate, and not tax families and businesses out of their main stake in the city. Law firms and other businesses "cherry pick" when they raid other firms for top talent. Cities are ill advised to attract only tempting upper-income in-migrators and freeze out more normal, medium-to-lower-income residents by unconstructive tax policies.
March 22, 2005
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