Grassroots
Is Bedford County haunted by the ghost of Judge Dillon?
There is a long-standing belief that local governments are not to be trusted to govern themselves wisely. That belief was memorialized over 100 years ago by Judge John Forest Dillon. Judge Dillon distrusted local governments so much that he devised a principle designed to curb the “unwise and extravagant” practices of local rule. That rule was adopted by five states, including Virginia, and is instrumental in governing how we in Bedford County address our problems today and will address them in the future.
The Dillon rule, which is largely a product of court interpretations, narrowly constructs the power of local governments, vesting overriding powers in the State of Virginia, i.e., Richmond, and leaving Bedford, and other counties of Virginia, with only those powers specifically granted by Richmond. The specific powers Bedford is granted are those most entities have in order to exist, that is, to pass ordinances, raise, borrow and spend money, sue and be sued, enter into contracts, and buy and sell property. However, there are clear limits to these powers. Bedford must exercise these powers only within the strict limitations placed on it by Richmond. If Bedford wanted to change those powers --for example, to broaden them -- it must appeal to Richmond for specific authority to do so.
What are the powers Richmond grants to Bedford and other Virginia counties under the Dillon Rule? It can zone (i.e., limit the kinds of use of property to certain areas) and provide traditional community services to “secure and promote the general welfare,” such as police and fire protection, and education and health services. Bedford is also allowed to raise revenue to pay for these services, but that power is strictly limited. Bedford may generate income, principally through general property taxes. But, it cannot impose taxes on new development projects to cover the costs of the additional community services the new residents require. In the face of increasing need, Bedford is left with little choice but to increase the rate of real estate taxes.
Not all of Bedford’s fiscal problems are homegrown. Richmond, basking under a rule that gives it more authority than responsibility, enacts legislation that counties are responsible for carrying out, but that it does not provide the funding to cover the costs to perform those services. This is often referred to as an ‘unfunded mandate.’ For example, Richmond may require the counties to maintain certain standards of community services, such as those defining the quality of education or housing, without providing the funds to cover the costs. Bedford, laboring under the same, rule must place greater demands on its property tax dollars to cover the costs of those mandated standards.
How does all of this play out in Bedford today? More than 80% of Bedford is zoned agricultural. But this designation, under the zoning adopted by the county in 1998, does little to control growth. Under this designation, farms may be divided into five parcels of three acres each, with the remainder into as many twenty acre parcels as possible. As a consequence, some areas of Bedford that were once farmland are experiencing the fastest rates of growth in the State, fed by the need for housing from the adjoining communities of Lynchburg and Roanoke. And, Bedford is promoting growth by putting in water and utility lines in rural areas now being referred to as “growth corridors.”
The result is that much of Bedford is becoming a residential bedroom community that requires increasing community services. Bedford is facing pressure to pay for new and improved schools and other community services. A recent and telling example is Forest High School. Yet, the Dillon rule limits the ability of Bedford to raise funds to pay for those services. As a result, the County must rely most heavily on its general property taxes to pay for the lion’s share of these services.
Bedford is left with little choice but to raise property taxes to fund these increased services for these new residents. In essence, all the residents of Bedford are footing the bill for its growth. Bedford’s farmers are hit particularly hard. They own the major portion of Bedford’s real estate throughout the county, not just in those areas receiving the increased services. The value of the services farmers receive is well below the amount of the property taxes they pay. Their land is being assessed higher as a result of the County’s growth. The County’s large land holdings are the County’s cash cow for development.
As a rule farmers and owners of large tracts of land, and commercial interests, receive a small fraction of each $1.00 they pay in taxes. The ratios of values of dollars paid to value of services received vary from county to county, ranging from some $.37 to $.80 worth of services for each $1.00 paid in property taxes. (The specific ratios for Bedford County could be determined by a Cost of Community Services (COCS) study, which is estimated to cost around $15,000 and could be completed in a few months. The concept of the COCS studies will be examined more closely in an up-coming “Grassroots” article.)
The increased financial burden brought about by increased demands for community services, when coupled with the normal hardships of farming, is forcing farmers deeper and deeper into debt, if not out of business altogether. Commercial interests, on the other hand, may consider this tax as a kind of investment in the community to attract more residents and, in turn, more customers, to the area. Farmer-subsidized growth is not only bad policy from the farmers’ point of view; it poses long term problems for the county. The county’s fiscal problems get worse as the number of farms diminishes and the demands for services of the bedroom communities increase.
In addition to increasing property taxes to meet the growing costs of the residential property, the county has the option of converting farmland into commercial property. Without more commerce, both the County and the farmers are on a path of deeper debt and financial hardship. Unless the County finds new and innovative ways to meet the increased costs for community services, more residential growth will require higher property taxes, more commercial areas, and continued loss of farms.
In next week’s column, we will examine how Bedford County can begin to address the problems of growth, in spite of the judgements of Judge Dillon.
