Blair's Blog: Revenue Sharing Summit: More city-county cooperation

Charlottesville, Va.—The City Council, Albemarle County Board of Supervisors, and the two school boards and superintendents met Saturday to discuss revenue sharing. The county board members each represent an electoral district whereas the city boards are at-large and each member represents the entire city.

On July 12, city and county school board staff will meet to develop a “project charter” of ideas for greater cooperation, cost savings and how to move forward. The school boards will discuss the report at a meeting in early fall. Several small groups were formed to study consolidating schools and social services to address the problem of students moving back and forth between city and county and having to change school each time.

The four bodies will meet again in a year to discuss any progress or lack of progress. Even though the city and county share more services than most communities, the strategy is to increase cooperation instead of addressing the unfairness of the 1982 revenue sharing agreement and the state’s composite index for funding the schools.

Under the agreement, the county purchases the city’s annexation rights. This year the county paid $18 million, 10% of its real estate taxation, for the city not to annex. But when the state computes how much school funding to give each locality, the payment is not counted as city income. So last year the County School Board asked state representatives to change state law to make the school funding formula more fair.

The moderator of the summit, Delegate David Toscano introduced but later withdrew the bill when city constituents demanded the double benefit continue: revenue from county for general expenses and extra school funding. Toscano would not say if he would re-introduce the bill in 2011 if the county makes the request. He represents the city and county’s urban ring.

Delegate Rob Bell, whose district includes northern Albemarle, carried the bill.

Also at the summit was State Senator Creigh Deeds, who has kept a low profile in this debate. He said Virginia is the only state where cities are independent of the surrounding counties.

County School Board Member Brian Wheeler wanted to take off the table the possibility the county would seek to re-introduce the bill in 2011. But there were objections and no agreement.

The two sides of the issue were made clear late in the two-hour meeting.

Councilor Kristin Szakos said the issue is divisive because the county wants to take $2.8 million from city schools.

She was quickly rebuffed by Supervisor Ken Boyd and County School Board Chairman Ronnie Price. They said it’s a fairness issue. The city is actually taking money from county schools, in addition to the revenue sharing, which could be going to county schools.

The panel spent some time talking about how city and county schools could share purchasing. If they bought supplies as one customer, they could get a bulk discount. Then someone pointed out that they already share purchasing. And County School Superintendent Pam Moran confirmed.

There was consensus that similar meetings in the past were all show and talk but nothing becomes of it. That could be the outcome of this meeting.

The History

On March 21, 2010, three former City Councilors wrote an editorial in The Daily Progress to inform newcomers “a few facts” about the 1982 agreement. (“Revenue sharing—how it came to this: A brief history between Charlottesville and Albemarle”) The authors were Nancy O’brien (Councilor 1976-1980), Elizabeth B. Gleason (1980-88), and Virginia Daugherty (1992-2000).

(1) “First, the payment to the city is not a gift—it is a legal obligation in exchange for Albemarle maintaining jurisdiction over and receiving taxes from the income producing land adjacent to the city.”

Think about that for a minute. “In exchange for maintaining jurisdiction.” Is the revenue sharing a form of rent? The city really has jurisdiction but rents it to the county? If the county defaults on its legal obligation, it loses territory. The county exists at the pleasure of the city.

(2) “Second, the fact that annexation is no longer allowed is irrelevant to the current discussion.”

Isn’t it relevant? Since annexation is no longer allowed, the city no longer has a right to annex. The General Assembly eliminated that right. So this year the county pays $18 million for the city’s right to annex. But there is no such right. So the county is literally paying for nothing. They’re paying the city to allow them to exist even though the city has no power to take over the county. The city should look to the state to pay for the annexation rights the state has taken away.

(3) “Had it been successfully pursued, the city would be receiving about $25 million from the enlarged tax base.”

So the city claims 72% of the revenues from county land it could have annexed. But there’s a flaw in this logic. City and county taxation and regulation are not equal. Just as higher tax rates limit the tax revenue because people work less when taxes are high, it’s more likely higher city taxes would have meant less development and less value.

(4) “the amount shall not exceed 1 percent of the total locally assessed value of taxable real estate.”

Does that make you feel better in the county? Right now the total county real estate tax is about half of one percent. Yes, the revenue payment cannot exceed double the county’s total property tax this year.

(5) “So fair was it deemed to be that the county voters overwhelmingly approved the agreement in a referendum.”

The vote was 60%. So to end the agreement, all you need is a referendum.

(6) “It is similar to a bond, or, for an individual, a mortgage.”

Not really. Maybe a mortgage where the owner changes every two years, every time’s there’s an election. Each time a new person buys the house, they can negotiate new terms of payment and interest.

(7) “Annexation requests could not be made any more frequently than every ten years.”

That statement contradicts the chart and other evidence. The chart shows annexations in 1963 and 1968. Mayor Mitch Van Yahres was holding closed City Council meetings in 1971 to discuss how and what to annex. According to Van Yahres at a 2006 forum, his attempt to annex Fashion Square and Pantops Shopping Center was rejected by the courts, the last attempted annexation before the state-wide moratorium.

The three authors of this editorial reference a history book commissioned 1976 by the Albemarle County Historical Society, Albemarle, Jefferson’s County 1727-1976 by John Hammond Moore. Below are the pages that talk about annexations.

That section is in the chapter called “Race Relations, Annexation, and Rural Change.” The connection between annexation and rural change seems clear—where rural areas become urban, you have annexation. But what has it to do with race relations?

In the 1850s and 1860s, blacks outnumbered whites in Albemarle County including the town of Charlottesville. The 1870s and 1880s saw such rapid growth that the town incorporated as a city in 1888. Then things went downhill for blacks. The black vote was diluted with every annexation. Then as now whites settled the suburbs, which would soon be annexed.

A 1920 referendum approved the at-large city manager form of government ending the 12-member bicameral Council system with an elected mayor. Now the 51% white majority could consistently outvote the black minority with devastating results.

1982 Revenue Sharing Agreement, includes all 9 pages, table of payments, and the formula.

Revenue Sharing speech 2000 and summary of Blair Hawkins campaign for city council