The cigarette tax debate is leading further down the Richmond rabbit hole. That's why Style conducted a nuts-and-bolts explainer with City Council member Parker Agelasto, patron of an 80-cents-per-pack tax.
Virginia is ranked second to last in the country when it comes to state cigarette excise tax rates at 30 cents a pack — the average is $1.72 — according to statistics compiled by the Campaign for Tobacco Free Kids in Washington.
Altria is broadcasting anti-tax rhetoric, seemingly in solidarity with some tax-fatigued everyday Richmonders. And there seems to be a fascination with accommodating Altria when it comes to City Council decisions. These parties call for alternative solutions, but offer none. In part, this is because the school mess is so huge that few are willing to point fingers beyond the usual suspects.
During former Mayor Dwight Jones' administration, in 2010, the adopted budget had no money for school maintenance. Zilch. In 2008, Philip Morris, a subsidiary of Altria, began receiving an annual deposit of $1.25 million from the city. This amount is marked as the "Philip Morris Real Estate Grant" in the budget and is part of the incentives from the Jones deal to build a research center.
Philip Morris' subsequent real estate decisions include, in 2009, putting several Richmond properties up for sale, and last year buying from University of Richmond the corporate headquarters it has used in Henrico County since 2003. It also built warehouses in Chesterfield, thanks to a $1 million grant from the county.
Meanwhile, Philip Morris is scheduled to receive its 10th grant from Richmond in 2018, bringing the total to $12.5 million, all at taxpayer expense. Compare that with Mayor Levar Stoney's five-year capital spending plan for school renovations, which is roughly $13 million.
Agelasto sat down to parse out various end games as the cigarette tax heads for reconsideration by the council's Finance Committee on April 19. This interview has been condensed.
Style: How would you contextualize the current school maintenance needs?
Agelasto: If you look at Richmond city public schools, the average age of the buildings is over 50 years old. Eighty percent of all the buildings are over 20 years old. The way that the city has been funding maintenance, since about 2010, as far as I can tell, has been very, very low.
Why has funding been low since 2010?
In 2010, the city put zero dollars into school maintenance. Between 2010 and 2014, the city capital improvement program, which is what funds school maintenance, had on average just over a million dollars each year. We're talking 44 properties. The school's chief operating officer informed the City Council that they needed between $8 and $11 million every year just to maintain what they have, let alone dig out of the hole that zero dollars put them in.
How do things look from the perspective of the current year?
Well, this currently proposed maintenance budget is $1.5 million. It's back down to these low levels. Over the next five years, the mayor's proposed capital budget has roughly $12 [million] to $13 million in there for school maintenance. The schools asked for $90-some million.
So the mayor's maintenance budget over five years comes out to about 14 percent of what they've asked for. What other options are out there?
The city has hit its debt ceiling, so you can't borrow more money. One person said, 'Well, we'll trade out construction money for maintenance money.' That's just robbing Peter to pay Paul. That's why the cigarette tax is on the table, because of the crisis in school funding. When you start checking off the boxes of available sources of significant revenues, the list is very limited.
Some of the strong reactions make it seem like the cigarette tax is a new proposal.
It's not new. In reports to City Council, the option has been recommended since 2014, when they first started looking at school funding. We talked about it last year during our budget, and it got voted down by the current council. There were two of us that supported it. One additional person said they would support it, if it was part of a more complete funding plan for the school's facilities. So, during the meals tax [debate], I kept asking for a more fully funded plan. I heard, 'No, we have to do the meals tax, then we'll look for other revenues.' We did the meals tax, but where are the other revenues? Where's the fully funded plan? It hasn't come through. It's been over a month.
People have complained that the cigarette tax would generate only $5.3 million each year.
That's not an "only" number, that's a huge number. Five million dollars a year is more than three times the mayor's proposed maintenance budget. Mayor Stoney is supportive of the cigarette tax if it goes into the general fund and is used as a cash payment spent immediately. I'm good with that. We're actually amending the paper to reflect that.
How do we know this money will go straight to schools?
It'll go into a special reserve fund, after entering the general fund, by ordinance. Then the council can appropriate those funds and release them into the budget. The tax doesn't go immediately to the School Board. We're also going to require a monthly report. We shouldn't see any expenses coming from that fund for anything other than schools.
Shouldn't the city set up oversight of school administrators and their salaries, too?
At our March 26 meeting I'll be introducing a budget amendment to provide for our city auditor and the staffing he'd need to conduct an internal audit for our schools.
Would the tax hurt Altria's bottom line? Might they take 4,000 employees from Richmond?
They don't even have 4,000 employees in the region at the moment. They have 3,600. A decade ago they had about 7,000. They've already cut their workforce in half. And if it's such a dying industry, you're not going to see Altria reinvest in a brand new capital plan. Look at it this way. In Virginia alone, 92 localities have a cigarette tax. What is one more?
Altria Donations to 2016-2017 Local Candidates
Here is a list of Altria contributions to Richmond City Council members, Mayor Levar Stoney and various political action committees associated with the seated members. The source for this information is the Virginia Public Access Project and the Altria website, which lists all contributions in all states. — compiled by Carol A.O. Wolf
Andreas Addison: $500
Kimberly B. Gray: $500
Kristen Larson: $500
Ellen Robertson: $2,000
Cynthia Newbille: $1,000
Reva Trammell: $2,000
Michael Jones: $500
Levar Stoney: $25,000 to his PAC
*No contributions from Altria for Chris Hilbert of the 3rd District or for Parker Agelasto of the 5th District.