Now PWC suffers from too much revenue.  We just can’t win.  I have been searching for a positive kudo for Corey since coming on to this blog.  Maybe I have finally found it in the Washington Examiner

Just a few short months ago, Prince William County supervisors were debating solutions to what Board of Supervisors Chairman Corey Stewart described as “probably the toughest budget this board has faced in 25 years É or so.”

This week, they’ll have a different kind of “problem” to deal with — $4.5 million in general revenue funds in excess of budget estimates for the last fiscal year, which ended June 30.

Still, Stewart wasn’t kidding. The board made significant cuts across the board and raised the real property tax rate from $0.97 to $1.212 per $100 of assessed value to address a projected shortfall of nearly $200 million for fiscal 2010. But better-than-projected revenues from real estate taxes, personal property taxes and investment income helped buoy the county over revenue estimates for fiscal 2009.

Budget Director David Tyerar and Finance Director Chris Moreno will both recommend that the excess money to a general finance:  

“to maintain an undesignated fund balance of 7.5 percent of general fund revenues — a major factor agencies examine to determine bond ratings. They also recommend that about $155,000 be added to the county’s Revenue Stabilization Reserve.”

Meanwhile, has anyone noticed a reduction in their mortgage because of reduced taxes?  Mine hasn’t dropped a penny from last year.  I called my mortgage company and notified them.  They weren ‘t real excited and nothing has changed.  Perhaps this is where the surplus is coming from.  No one really got a reduction in taxes. 

All kidding aside, (I think)  having solid financial underpinnings is a good thing when it comes to bond ratings.  We can borrow for less when we need to.  How does one go about buying a Prince William County bond?  Are they always available or do you have to buy within a certain time period? Inquiring minds want to know.

37 Thoughts to “Too Much Money?”

  1. ShellyB

    Thanks for the good news, M-H. Maybe we are finally coming out of our recession just as the nation is. I did not even understand what the bond rating was for or about to be honest. Maybe someone can explain. I thought only federal governments could borrow money.

  2. IVAN

    It appears that our economy has been somehow “stimulated”. Moon, you can buy locality bonds through different mutual fund offerings. These usually come under the category of “Tax Free Municipal Bonds”. Finding PWC bonds may take some searching. Also the yields may vary.

  3. Moon-howler

    There is some website to search for them. It is hard to find them for sure. I have found VA bonds before. Just not PW Bonds. Ivan, are they always for sale or is there a window of opportunity? You can also take the easy way out and have a broker do it, for a fee.

    Shelly, all I know is, municipalities issue bonds when they need to raise (borrow) money for something. Municipal bonds have several tax advantages. The better our bond rating, the lower interest we pay. That is one reason people buy them.

    They also usually pay a quarterly coupon or interest. At the end, you get your principal back. There are corporate bonds and treasury bonds from the feds.

    Bond info obviously isn’t my forte.

  4. Moon-howler

    I think the imprecision of estimation is the cuprit here rather than any windfall profit.

  5. Most property owners will not see a tax decrease. There is a misperception mortgage companies adjusted the tax escrow portion of a mortgage payment because there was a rate change in April. It doesn’t work that way and it didn’t happen. I “argued” during the budget process that the illusionary tax decrease being presented was just that – illusionary – because banks have their own method of property valuation. The County has been “warning” anyone who listens, for at least the past year, that bank valuations are HIGHER than sales prices. The result is that real estate taxes ARE higher for those who haven’t sold their properties and is evidenced by the higher real estate taxes being received by the County now. No one listened to what I said because all they heard or wanted to be heard were the words “tax decrease”. I illustrated whereby a home had to decrease in value by $245,000 to “enjoy” the $ 500 tax reduction we were told would occur. But the tax decrease would only occur from a sale, not an adjustment to the mortgage because of a rate chnage. Explained differently, the SALES prices of properties being bought are substantially below the banks appraised values, which will turn into lower real estate taxes for those properties only, because taxes are paid on the fair market value of property, their sales price, not their appraised values. As the vast majority of property owners in PWC have not and will not sell their houses, they simply will not see a tax reduction. Economic’s 101. I am firmly convinced most of the members of the BoCS have absolutely no understanding whatsoever of basic market, financial and/or economic processes. The bottom line is we now have a surplus due to higher real estate taxes NOT because property values are increasing, which is what we will be told tomorrow, but because the BoCS raised the tax rate on properties whose MARKET values decreased but whose APPRAISED values haven’t changed, which is what we WON’T hear tomorrow (once again, we had the wool pulled over our eyes). BIG, HUGE Difference and not one understood by many on the BoCS. Almost none of them have the real life experince to know and understand how markets work. To answer other questions, anyone can buy government issued bonds through a a stockbroker. And lastly, every level of government (federal, state, and local) issue bonds to finance their services. Every state government but one and all local governemnts, by law, have to balance their budgets. Only the fed’s can have a deficit (unbalanced) budget because only the fed’s can print money to fund the deficits if they don’t sell Treasury bonds to do so. Either way, bonds (federal, state or local) are in reality just deficit financing anyway because the government entity issuing the bond is using that money today to pay for todays servives but will repay those bonds in the future through taxes paid in the future. A rose is a rose by any other name. And as Sean Connolly said in “The Untouchables” in a line I love: So endeth the lesson………John S Gray

  6. ShellyB

    Thank you Mr. Gray. Everyone should read that post! Or make it it’s own thead.

    I’m not sure if I like the Corey Stewart brand of tax cut. Losing so much on your houses value in order to be taxed less. I don’t mind that the Board raised our taxes so much as I regret the loss of home value and under-funding of schools and public safety.

    Thanks also for explaining the difference between selling bonds (can do for local gov’s) and deficit spending (no can do).

  7. Mando

    @ Moon-howler

    My taxed assessed value went down and my mortgage followed. My escrow WAS adjusted by my mortgage company.

  8. Mando: Well, good for you. My residential property decreased $107,000 and my 1200 square foot office condo, built in 1983, went UP by a ridiculous $60,000 in value for the 2009 valuation but my taxes due July 15th did in fact increase for both. I know because I pay them, not a bank. May I ask how much per month your mortgage was reduced? Did you refinance this year? Is it possible the decrease occurred due to a correction of an excess in your escrow, because mortgage companies may only hold six months taxes & insurance? Did your mortgage interest rate decrease? Did your MORTGAGE servicing company change? Like I said, MOST property owners will not see a decrease, but that doesn’t mean everyone will not. There are many explicable reasons for a mortgage payment to decrease. Bottom line is your wallet and therefore, good for you. ShellyB: Please call me John?????? Glad to help explain where I can. I’m not an expert but with 33 years experience as a CPA I do think I have more of a handle on taxes, finance and economics than the average taxpayer.

  9. ShellyB

    John, thank you again. Perhaps Corey Stewart could hire you to explain such things before he misleads the public heaping praise upon himself for something he hasn’t delivered? Or is he counting on us not having the ability to decode his sneaky spin?

  10. Mando


    Without my statement in front of me, I’m working off memory. The decrease wasn’t much, I want to say around $30/month. Refinanced in 2001. I actually owed into my escrow and rolled it for convenience’s sake. Rate is the same. Service company is the same.

  11. Gainesville Resident

    Now wait a second on this. Mostly everyone who has a mortgage pays into an escrow account. Usually the escrow account doesn’t adjust the property tax portion other than once a year. Now, one can go to the PWC website and figure out how much their property taxes are for 2009. Most likely they will be less. So that means you may end up paying too much into your escrow account. EVENTUALLY, you will see your monthly payment adjust downward – but it depends how often your mortgage company does that analysis. It’s simple math. The idea that somehow the banks establish their own valuation of the property, different than the county does – to somehow figure out what you pay into escrow, it just doesn’t work that way.

    Now, maybe if you escrow analysis is late in the year, you won’t see the adjustment until late in the year. Or if it was very early in the year, remember the new tax rate and evaluations came out sometime in March I believe.

    But sooner or later, as long as your property taxes as calculated by looking at your assessment multiplied by the tax rate went down, your monthly payment will go down.

    I’m a little confused by statements to the contrary. Otherwise, you need to contact your mortgage company – as that would mean you are going to eventually have some huge surplus in your escrow account.

    All of this is just simple math and there’s nothing complicated about it.

    Mando’s $30/month sounds right – that would be $360 a year. But everyone can calculate it themselves by going to the county website.

    The only way your mortgage payments might not go down is if you hadn’t been paying enough into escrow last year, and you owed money into escrow. That can happen, especially when property taxes go up from one year to the next, and your escrow account doesn’t adjust right away to take that into account.

  12. 40 yrs in Woodbridge

    My assessment went down, my mortgage payment went down a little bit and here is the BIGGIE…..I received a reimbursement check this weekend (yes a live check) from my mortgage company to the tune of over $1,800….the overage sitting in my escrow account.

  13. Gainesville Resident

    Yes, if your escrow account has too much of a surplus, the mortgage company must return it to you after some period of time. I don’t know what that number is – it’s probably some percentage of your the sum of your monthly payments. But even if an escrow account has no surplus – when they recalculate your escrow payments once a year, the payments should lower to take into account the lower property taxes owed. So in general, depending on how much your property tax has decreased from 2008 to 2009, your monthly mortgage payment should decrease by 1/12 that amount. It just might not happen until later this year – and quite often might be the anniversary of when you obtained the mortgage (bought the house or refinanced).

  14. Gainesville Resident

    Actually, all that anyone has to do is go to – look up their property – go to the Assessment tab. Then you just have to take last year’s assessment and multiply by last year’s tax rate, and then this year’s assessment multiplied by this year’s tax rate, and compare the two. Actually subtract this year’s tax from last year’s tax, and divide by 12. That should give you an approximation of how much your monthly payments will go down when your escrow is re-analyzed. It might go down a bit less if somehow you weren’t paying enough into escrow last year. But it is pretty much simple math.

  15. Moon-howler

    Mine sure isn’t any less. The billing at the $1.21 rate starts Jan 1?

    That isn’t even computing for what my June tax bill was. I doubt that the mortgage company will alter anything.

  16. My taxes went up.

    Thanks, John, for the lesson. You are a CPA, right?

    I think I will vote for you next election.

  17. Gainesville Resident

    I don’t think most mortgage companies would have any way of knowing in advance that the taxes for a lot of properties went down. They would find out when they get the June bill, which probably comes out in May.

    So the earliest that some people would see any change in their monthly mortgage bill – would be those who’s escrow accounts are analyzed in June. Some people might have to wait until NEXT May to see the change.

    Escrow accounts are good for the banks, they collect extra money from you and make interest off that money. They never are that great for the homeowner. If I could find a way of not having an escrow account and paying my property taxes and homeowner’s insurance myself, I would do that. Unfortunately, the great majority of mortgage companies insist on escrow accounts.

    I still say most people within the next year will see a decrease in their monthly payment, whenever their month to get their escrow accounts analyzed comes up.

  18. Gainesville Resident

    I believe the tax rate increased by about 10%, but not being a resident in the county last year, I’m not sure what the old tax rate was.

    However, assuming the tax rate increased by 10%, the only way for people to see their property taxes go up would be if their property’s assessed value decreased by less than 10%. If so, they should be happy that their property didn’t decrease in value by as much as other people’s property.

    All I can do is compare my City of Manassas property – which decreased from $272K to $123K – a shocking decrease of more than 50%!!

    For those very few people out there who’s taxes actually went up, they should be really happy – that means their property lost less than 10% of the value from the previous year.

  19. Gainesville Resident

    Actually, I see the old tax rate was $0.97. So that’s really about a 15% increase. In that case, in my above post, everywhere I said 10% just substitute in 15%.

  20. Gainesville Resident

    Moon-howler :
    I think the imprecision of estimation is the cuprit here rather than any windfall profit.

    Yes, remember when they arrived at the new tax rate, it was based on projected value of assessments on houses. The assessments were not in yet – so at best it was just a guess as to how far the property values fell.

    Obviously, they guessed slightly wrong – they assumed property values had fallen a bit further than they did (on average – I’m talking about the sum total of all properties). Since they erred on the low side, the actual assessments came in, apparently were slightly higher (on average) than what was projected, and of course there you have it – a budget surplus!

    In today’s real estate market, guessing property values is definitely not an exact science. Anyway, we can all be happy they guessed on the low side, resulting in a surplus, rather than the other way, in which case we would have had a deficit.

  21. Gainesville Resident

    John S Gray :
    I illustrated whereby a home had to decrease in value by $245,000 to “enjoy” the $ 500 tax reduction we were told would occur.

    Actually, this is very incorrect – you can’t just take the rate increase and apply it to the DELTA between last year’s assessment and this year’s assessment. You have to apply it to the total. You’re property value can decrease by MUCH MUCH less than $245K to see a $500 tax reduction.

    Again, it’s just simple math, but I’ll illustrate with this hypothetical case:

    Hypothetical property: 2008 Assessment = 300K, 2009 Assessment = 200K
    That translates to 2008 Property tax (@0.97) of $2910
    That translates to 2009 Property tax (@1.212) of $2424

    In THIS case, almost a $500 drop, but guess what – the property value only changed by $100K!!

    THAT is why you can’t just take the delta – and anyone who does to come up with that $250K delta to get $500 property tax change, is doing faulty math. The property tax rate goes across the entire assessment, NOT just the delta between this year’s and last year’s assessment.

    Everyone should just do the math on their own property, and you’ll see the statement I quoted above, simply is not true and is just plain wrong and misleading!

  22. Gainesville Resident

    To put it in mathematical terms – the property tax delta from this year to last year would be:

    x*0.97 – y*1.21 where x = 2008 assessment and y = 2009 assessment.

    Some people are trying to do this in figuring out the property tax change (and this is quite incorrect):

    (x-y)*(1.21 – 0.97)

    The problem is, that is definitely not the same, as that formula works out as follows:

    (x-y)*(1.21 – 0.97) = 1.21x – 0.97x +1.21y – 0.97y
    which works out to 0.14x +0.14y

    One can easily see that 0.14x + 0.14y is not the same as 0.97x – 1.21y!!

    That’s proving mathematically why you can’t just take the “delta in assessments” and multiply it by the “delta in property tax rates”.

    Q.E.D. as they say in math.

  23. Moon-howler

    GR, you might want to tell folks who aren’t mathematical what the delta is. Otherwise you are going to get some eye glaze over.

    Ivan, congratulations on digging yourself out of the well with that 401k. I am still digging. Will be digging for a long time. What is your secret?

  24. Emma

    Ivan, I lost about 30 percent of my 401K. Did you switch everything to bonds before the crash? Let us in on your secret…

  25. Censored bybvbl

    We’ve paid our own taxes and insurance for quite some time. On our original mortgage, I petitioned the bank to allow us to pay those items after we had paid 20% off our loan. It was common at those times to be able to pay those items yourself if you put 20% down on your home. I don’t know how banks view that 20% now since so many homes have dropped in value. A person may have paid off 20% of the loan but still not have any equity in the house because values have dropped.

  26. Moon-howler

    Ivan, you have become the investment guru of Anti.

    Emma, you are lucky, I lost more than that in anything that wasn’t a fixed account. I am no where close to breaking back even. He must have switched to bonds or fixed somewhere in the middle and then come back out of bonds or fixed and then ridden the near bull wave.

    I am green with envy. I stuck it out…rode that elevator to the bottom floor. Hell I am down about 30% and fell like I have really rebounded.

  27. GainesvilleResident

    I lost 40% last year on my 401K, and am only back up 13.8% YTD, so I have a long way to go. On my personal stocks I’ve done much better but between last year and this year so far – I’m still down about 10%. And I would be down a lot more if I hadn’t gotten lucky and bought a few stocks that were extremely cheap either at the end of last year or early this year. Anyone who’s breaking even taking into account last year’s losses and this year’s gains is lucky.

    Sorry about the confusing posts I did on the property tax savings. The term “delta” is just the difference between this year’s property tax and last year’s property tax.

    Anyway, the point I was making is you can’t just take the difference of the two years’ assessments, and multiply by the difference between the two years’ tax rates, and get the amount of savings. It doesn’t work that way. I saw people doing that last year too, and coming up with this idea that the property assessment had to drop more than $245K to see a $500 reduction in property taxes. That’s just wrong. It depends on the starting value of your house, but as I showed above, for a $300K house it would only have had to drop by $100K to get $500 less in property tax. $100K is a lot less than $245K! Actually, the higher the value of house in 2008, the less of a drop in assessment it would need to have to see the same amount of property tax savings.

  28. Moon-howler

    Thanks for clarifying, GR. You have been very lucky with the stock market. I am still down. I don’t trade as much as you do. I am having great faith in slow and steady wins the race in the personal stock dept. Gotta love those robots and apples. 😉

  29. GainesvilleResident

    Luck is the right word – I did get lucky lately with a few stock picks. However, I got hammered last year just like everyone else. I still think the robots have got to level off – they’ve gone from $86/share to $232/share in just a few short months. At this point, slow and steady gains would be fine actually. All this buying and selling is kind of tiring. At this point other than IBM stock from way back when, the robots (ISRG) is my longest held stock – some of which were bought late last year when it was in the $110 range, and then a lot more when it bottomed out at $86 back in March.

  30. GainesvilleResident

    Actually, those apples are doing well – and that one I screwed up – I chickened out when it was down a bit, and sold. If I had held onto it, those shares would be doing really well for me. I’ve also sold a few other stocks too early and missed out on some really good gains.

  31. IVAN

    Emma, Most of my Mutual Fund money was either in A Life Fund (60/40) stocks to bonds. The others were primarily in Balanced Funds. They went down but not nearly as much as stocks in general. When the market started to turn around earlier this year, I shifted resources to more aggressive sectors. If you check the Lipper averages in the Sunday business section you will notice that Emerging Markets are up 40 this year. Mid-caps are up around 10 also. My funds allow me to move money from one sector to another without paying fees. Not all funds operate this way .

  32. Moon-howler

    Mine all operate that way also Ivan. Internal rebalancing is fine. What is a balanced fund? I am not totally clear on that. If it is prudent to own one, I can guarantee I don’t have one. How did you know when to turn up the volume?

    My favorite emerging merging markets fund is a Wisdom tree etf called DEM.

  33. Moon-howler

    GR,those robots ISRG is more than lucky. that is just uncanny.

    My apple has a little zinger in it. I bought most ot 86.00 then rode up to 199, then rode all the way to the bottom floor, and now am riding back up again. I have seen a lot of floors. No bull about it!

  34. IVAN

    Moon, My balanced fund is Alliance Bernstein Balanced Fund. It basically is designed to low risk approach while not being too aggressive. It makes a good back stop for when the Market fluctuates a great deal.

  35. Moon-howler

    I have always steered away from those because I am too greedy. Were you always in Alliance Bernstein or did you hop in when things started going south?

    I think my comparable that I can get in to is Van Kampen Equity and Income I
    Ticker: ACETX
    Do you know anything about it?

  36. IVAN

    Moon, I have been in Alliance from the beginning but mostly as a base line investment. Only about 25%. Van Kampen funds are very good by my experience. My emerging markets in with them. Equity and Income funds should do well during the current upswing.

  37. Moon-howler

    I love foreign stocks, etfs, and emerging markets. My addictions. Well, those and turquoise.

    Thanks for the info. I just went and moved a little money into van Kampen, which I also want to call van de kamp like the fish sticks.

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