Order a print subscription
Search: 

Archive


Bail Bondsman Henrico VA Richmond VA
cover
News

Selling the Meals Tax

Last month the Henrico meals tax passed, adding 4 percent to every county restaurant bill and raising an estimated $18 million a year in county funds.

Here’s the story of how it happened.


By Greg Weatherford
Sidney Gunst Jr. was upset. The county was at it again.

You’d think the man who developed Innsbrook, the huge Henrico County office and housing complex, would be for a meals tax. After all, developers were supposed to be one of its beneficiaries because the meals tax was supposed to keep real-estate taxes low.

You’d be wrong.

“The citizens of Henrico are being misled,” Gunst fulminated in Innsbrook Today magazine in October. As he had many times before, he argued that the county was being disingenuous in its claims that the only options were to add a meals tax or to make dramatic, potentially catastrophic cuts to the county schools.

“The county continues to pursue tax increases in its quest for more money without offering us real, long-term alternatives,” Gunst wrote. “ … Unless we reject this referendum, the county learns that it can get what it wants if it is willing to mislead its citizens. We deserve better.”

The county’s approach rankled Gunst, as he made clear whenever he could. Henrico should live within its means, he said, rather than “kick the can down the road.”

Also, the county should be upfront with its citizens that any money raised in a meals tax would go directly into the general fund, he said. True, the county says the funds would go to schools. But, as Gunst argued often, how could you be sure? “It’s like dividing up water in a barrel,” he says, still agitated days after the vote.

Gunst put his money where his rhetoric was – he helped set up an advocacy group, Stop Henrico’s Meals Tax, and donated $15,000 to help fund it. As a wealthy county developer, he was used to tough fights. This one he wanted to win.

The Three Amigos


Elsewhere in the county, a trio of political consultants was working behind the scenes to prove Gunst wrong.

Abbi Easter, Michael Brown and Rhett Walker had years of campaigns behind them. Their political careers stretch back quite a ways – to Doug Wilder’s 1989 campaign that made him the first African-American governor elected since Reconstruction. They’d joined up as a team six years ago to work on Donald McEachin’s primary win for attorney general. (McEachin lost in the general election.)

They don’t have an office. They don’t have business cards, or even a business name, though they sometimes jokingly call themselves “the Three Amigos.” One of them – Walker – doesn’t even have a cell phone.

But they knew Henrico. Recently they’d worked on Shannon Taylor’s successful run for commonwealth’s attorney, and on Tyrone Nelson’s longshot 2011 win over five-time Board of Supervisors incumbent Jim Donati in the county’s Varina district.

But a campaign like this was new to the Three Amigos. They’d answered a request for proposals from the Richmond Association of Realtors for a communications campaign to convince the voters of Henrico to pass the meals-tax referendum.

The Richmond association, led by CEO Laura Lafayette, wanted the referendum to pass for a couple of reasons. Of course the group was opposed to higher real-estate taxes, which county administrators said would be the other option.

Political consultants Michael Brown, left, and Rhett Walker, far right,
were familiar with Henrico politics. Here they celebrate the 2011
swearing in of their clients Shannon Taylor, now commonwealth's attorney,
and Supervisor Tyrone Nelson.
But Lafayette, who has two children in county schools, says her association also believes good schools draw homebuyers and increase property values. “People don’t buy houses until they first buy into a community’s quality of life,” she says. “We just saw it as a business investment in the county’s future.”

True, the Three Amigos had never managed a campaign for a referendum before. They’d run electoral campaigns, though. And that’s what they told the Realtors they would do here too.

Their pitch, Walker recalls: “Hire us. We’re campaign people and this is a campaign. … We understand the geography of the county, we understand the messaging.”

“This is no different than running a candidate,” Easter agrees. “You figure out who the target audience is, figure out what will move them, and you try to get one more vote than the other side. It’s a campaign.”

No doubt aided by the trio’s prior relationships with Lafayette, who had worked with Walker on the Wilder campaign, and with Supervisor Nelson, they got the job.

Their first step was to see how the electorate felt on the topic. Lafayette’s association had commissioned a poll in April 2013 to assess Henrico voters’ views on the meals tax. As the consultants looked over the results, their hearts sank.

“A poll is a map to your campaign,” says Easter, a grandmotherly woman with cropped gray hair and a deceptively gentle manner. This poll? “Daunting.”

Laura Lafayette
The response was unequivocal: Henrico hated the meals tax. By a 2-to-1 margin, 67 percent to 32 percent, respondents were opposed to the idea. Across the spectrum – Democrats and Republicans, east and west, male and female, black and white – on average everyone said they didn’t want a meals tax.

And it wasn’t like this was the first time one had been tried. Henrico County officials had been pushing for a meals tax for years – unsuccessfully. The county had been lowering real-estate taxes as a way to entice development; the current rate of 87 cents per $100 of property value makes Henrico one of the lowest real-estate tax rates in the region.

To avoid a shortfall while not raising property taxes, administrators said, the county needed to raise funds other ways.

But ever since 1988, the General Assembly has forced counties to ask for voter approval on meals taxes – a requirement cities don’t face. And as a rule people don’t like taxes. Not a single large county in Virginia had approved a meals tax in a referendum.

Walker did some research, scribbling in one of his creased spiral-ring notebooks. Things didn’t look good.

“Bond referendums pass,” Walker says now, leafing through the notebook. He is sitting in a Carytown Panera with his two partners, going over the campaign. “Meals taxes don’t.”

Of 10 meals-tax attempts since 1988 tracked by the State Board of Elections in votes with high turnout, eight failed – and none of them were nearly as large as Henrico. Last year, four counties asked voters to approve a meals tax. All of them failed.

There had been hints that the plan might work. In March 2005, a special referendum on adding a meals tax in Henrico came close, losing by 153 votes out of 23,912. But that was on a rainy spring day with just 14 percent of eligible voters turning out.

This time, Henrico officials tried to avoid a referendum by asking the General Assembly during its 2013 session to give it a waiver, arguing that counties should be allowed the same freedom as cities and towns. The legislature denied the request. The decision would come down to the voters.

This time, Henrico officials scheduled the vote during the statewide November elections, partly because it would save a few hundred thousand dollars in setup costs, partly because a higher turnout would be more likely to succeed.

This would be a much larger group of voters than the special election of 2005, which would make the job of informing them more challenging, recalls longtime Supervisor David Kaechele, the board chairman.

Legally, no county official can advocate for or against a topic on the ballot.

“This time we’d have about 100,000 people voting,” Kaechele says. “To provide information to so many is much more difficult. but it’s the democratic way to do it.”

Looking for Clues


Meanwhile, the Three Amigos were poring over the poll, looking for a way to win. African-Americans were even more against the meals tax than other groups, Walker noticed. (Easter says that’s because “they would pay more [proportionally] and they believe they won’t get the benefits.”)

But some follow-up questions offered hope. “It is important to maintain high-quality schools in the area,” for example – 95 percent of respondents strongly agreed with that statement. Other, similar questions showed that voters believed strong schools were good for the community, good for property values, good for businesses.

That was interesting, because only about a quarter of the households in Henrico County have children in the public-school system. If people without kids were willing to agree that good schools equal a good community, that could be a winning message.

Rhett Walker
One message that got no traction from respondents, interestingly, was the idea that 40 percent or so of the people paying into the meals tax would come from outside the county – visitors for business or for pleasure. County administrators made that point repeatedly, but the Amigos’ campaign stayed away from it.

“Government bureaucratic geeks love that s--t, you can quote me on that,” Walker says cheerfully. “But nobody else cared.”

Walker, Brown and Easter started going to community meetings and town-hall discussions about the meals tax, many of them featuring the county manager, School Board members and supervisors. They tested messages on people who attended, fine-tuning their pitch. Seniors, for example, were interested in the argument that property values would improve with better schools but didn’t want real-estate taxes to increase.

The Amigos understood that any political push needs “some structure,” Walker says, to accept donations and file public reports. In May and June they brainstormed a name, Yes 4 Henrico’s Kids. Then they helped find a worker to manage the field work and schedule. Kristina Hagen started work with Yes 4 Henrico’s Kids in July.

The ground game was underway in earnest now.

Administration Support


County officials were hard at work too, attending town-hall meetings and discussion sessions. County Manager Vithoulkas and then- schools Superintendent Patrick Russo repeatedly emphasized the danger ahead – the idea that the county had cut millions from its budget already and that without the meals tax more cuts would be on fundamental services: teachers, tutors, staff.

At the county convocation at the beginning of the school year, almost 5,000 teachers heard the pitch for the meals tax and were encouraged to pass on the word, Kaechele says. Another 4,000 county employees heard the same message.

In July the county administration set up a website through a public-relations firm, West Cary Group, paying the company $20,000 for the job. The site offered visitors a countdown to election day, Nov. 5, and featured Vithoulkas and Russo making the case for the meals tax as a substitute for sharp cuts to schools and increases in real-estate taxes.

In September the county spent $26,000 to print and send 150,000 mailers to Henrico households. The mailers made it clear that the county’s leadership considered the meals tax to be the best way to avoid dire financial straits.

Gunst found all this outrageous. He still does. “What infuriated me was the lack of disclosure,” he says. “I grew up here. I went to Henrico County schools. I was surprised by the lack of transparency about this. … They used disastrous consequences.”

He adds, “There is a huge disparity between what they said the facts are and what they know the facts are.”

For example, Gunst charges that the county’s estimate that real-estate assessments will not increase, thereby raising money for the county, contradicted the county’s own data. “Mathematically they can’t escape it,” Gunst snaps, “and they know it!”

New Grass Roots


Yes 4 Henrico’s Kids got its public launch in September. Longtime Henrico County Manager Virgil Hazelett, popular with business groups, did the honors. Standing with representatives of the Greater Richmond Chamber’s Henrico Business Council, the Eastern Henrico Business Leaders, the Realtors and the Henrico County Council of PTAs, Hazelett said, according to press reports: “I’m here today in support of Henrico’s children and Henrico’s schools. … A meals tax is a small price to pay.”

Other constituencies needed to be reached other ways. For example, the eastern section of Henrico would prove particularly important. It had many potential voters who were unlikely to be moved by the CEOs of the Henrico Business Council.

From the poll, the Amigos understood that African-Americans overall were resistant to the idea of a meals tax. But many of those voters had said they were interested in improving schools and were upset at the idea the schools might have resources cut. And many were Democrats, who were overall more willing to consider the idea of a meals tax.

John Vithoulkas
Supervisor Tyrone Nelson, who represents the Varina district, had been making the case for a meals tax ever since the budget discussions of 2012. He hosted three town-hall meetings and met “at least 10 or 15 times” with constituents and community groups, he recalls. He appeared on radio shows to explain the situation.

“We shared the information and let people know what the alternatives were,” Nelson says.

He did so in dramatic fashion early one October morning, when he and a group of about 15 other ministers, mostly African-Americans from the East End, met at the county offices with County Manager John Vithoulkas.

“A lot of things were covered,” recalls the Rev. Marcus Martin, who attended the meeting. “We asked questions and poked and prodded.”

Martin, pastor of New Bridge Baptist Church on Nine Mile Road, came away from that meeting convinced that sharp cuts in the schools budget would fall hardest on poor students, whose parents can’t afford to pay for services not provided through the school.

“After John and Tyrone talked to us about it, we were willing to get on board,” Martin says. “The alternative was of much more catastrophic cuts to schools.”

On the more-affluent western side of the county, “you may be able to afford a cut in services but a lot of people can’t,” Martin says. “Do you want to create a class system within the schools, where some schools have no sports, some schools have no tutors?”

The tax also sounded better than the increase in real-estate taxes the county administrators predicted, he adds: “For me it was literally the lesser of three evils.”

He shared that message with his approximately 250 parishioners, he says. “As pastor, it’s my idea to persuade people about Jesus,” he explains with a chuckle. “It’s my job to put information in front of people, to let them know the facts and let them make their own decision.”

For another participant in that meeting, Roscoe D. Cooper, the influential pastor of the 1,300-member Rising Mount Zion Baptist Church, the turning point of the discussion was hearing Vithoulkas’ promise that any funds raised from the meals tax would go to schools. “He said, ‘Henrico County has a moral obligation to do what it says it’s going to do,’” Cooper recalls the county manager telling the ministers.

Cooper felt so convinced that when Yes 4 Henrico’s Kids later asked him to make a recorded “robocall” in support of the meals tax, he agreed. His recorded call went to 30,000 homes.

A Winning Chorus


There were voices raised against the meals tax. Political blogger and journalist James Bacon, working closely with Gunst, wrote often on his baconsrebellion.com website to criticize the county’s focus on a meals tax without considering cuts or innovative approches. The Richmond Merchants Association came out as opposed as well, publishing a column by its president and CEO, Nancy Thomas, in Henrico Monthly.

A pair of county tea-party groups also expressed opposition. Brown, in particular, made sure wavering Henrico voters heard about that – the tea party “were a good foil,” he says.

Opposing voices were being drowned out. The well-organized county management and the efficient work of the Richmond Association of Realtors and its team of political consultants were driving home their points.

“They packaged it pretty shrewdly,” acknowledges Bacon, the anti-meals-tax blogger. “Everybody loves little school children.”

In addition, the Amigos knew how to inspire and prod potential voters to action.

For example, a flier designed by the Amigos and distributed by Yes 4 Henrico’s Kids in the East End in the days before the vote argued that poorer areas’ schools would be harder hit by cuts.

“The side of the county they live on shouldn’t determine how much opportunity they are given,” the flier said, over photos of worried-looking white and African-American children. The fact that county officials had said all along that all schools would be affected by the success or failure of the meals tax went unmentioned.

By the time Yes 4 Henrico’s Kids organized a get-out-the-vote drive for school children on Nov. 5, Election Day – 1,500 students from Glen Allen knocked on doors in the Fairfield District – the tide had clearly shifted.

As the votes came in, Walker remembers thinking, “Damn. This thing might win.”

Easter watched the tabulations while babysitting her grandson. She was so excited by the results that she handed the 6-month-old to her husband – “so I wouldn’t accidentally throw him or something.”

In no precinct was the meals tax losing by much, and in some it was ahead. Considering public sentiment had been 2-to-1 against it seven months earlier, the turnaround was considerable.

Easter called Lafayette. “I’m 99 percent certain we’re all right,” she says she told the Realtors’ association’s CEO.

Lafayette snapped back, “Tell me when you’re sure,” Easter recalls with a chuckle.

By that evening, she was sure. The meals tax had won in Henrico, holding its own or winning in almost every district.

For the first time, voters in a large Virginia county had supported such a referendum.

In an era of anti-tax, anti-government rhetoric, a majority of voters had opted to pay more taxes.

Postscript


David Kaechele
The outcome has had effects already. For one, of course, the county will have another source of revenue for the foreseeable future, raising an estimated $18 million a year to offset what it calls a $100 million shortfall over five years.

County officials vow that that money is intended for schools, even though there is no legal force behind the promise. “Our reputation is that we do what we say we are going to do,” Kaechele says.

And the manner in which Henrico won its case has drawn attention. The county administration spoke consistently and forcefully.

The county’s Board of Supervisors and School Board convinced people who might have wavered – including Roscoe Cooper, the influential minister. “The fact that they were all in line with this new tax – that impressed me,” Cooper says.

The win is particularly notable considering how a similar tax fared in neighboring Chesterfield.

On Election Day, proposals in Chesterfield to raise $353 million for schools and public safety received wide support. But the proposal to help pay for those bonds with a 2 percent meals tax – half the rate approved in Henrico – was rejected, 44 percent to 56 percent. Chesterfield County had spent all of $20 on a website offering information on the meals tax along with a $7,900 mailer.

Essentially, Chesterfield County didn't press its case as hard. Jay Stegmaier, Chesterfield's county administrator, says that's a good thing. “I don’t think it would have served us well in the long run to have made the argument that it would be the end of the world and the sky would fall," Stegmaier told Chesterfield Monthly.

Will future referendums be proposed with similar force and conviction, backed with six-figure lobbying campaigns and informational budgets?

Developer Sidney Gunst, one of the loudest voices against the meals tax, worries they will. He says the experience has shaken his confidence in government and in politics.

Now that the county government has learned how to get a new tax passed, he says, what’s to stop it from doing it again? What’s to stop it from spending the meals-tax money on other expenses? “This isn’t over,” Gunst says. “We’re going to be watching.”

Supervisor Kaechele, who’s helped reduce the county’s real-estate tax rate to its current low, acknowledges that the fierce fight over the meals tax has left some bruised feelings.

“Government has to provide the services our citizens need and enjoy,” he adds. “Schools, public safety, libraries, parks, social services – all are important. While you may not like to help pay for it, you don’t want to have to get along without it either.”

As for the Amigos, who coordinated much of the campaign? They feel good. They spent about $200,000 to get voters to vote their way – significantly less than the cost of a big state Senate campaign, they point out – and achieved their goal.

“You’ve got to give voters a lot more credit than a lot of people do,” Walker says. “Voters are willing to look at a much bigger picture.”

Agrees Easter, “They were willing to rise above the cynicism we hear about all the time about government … and were willing to give the county an opportunity.”

Will the money be spent wisely?

“It’s up to the voters to be vigilant about that,” Brown says.

So far, no other counties have called to request their services on other referendums. But if they do …

“We’d be interested,” Walker says.

All three laugh.