Category: Government Finance
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The Forgotten Literary Fund
One of the many debates expected in the 2019 General Assembly of Virginia, which is coming at us like a freight train, will focus on school construction funding and the need for a dedicated source of revenue to repair or replace old or dilapidated local facilities. Proponents have latched onto additional sales tax revenue that…
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Medicaid: the Program that Ate the Budget
Budget forecasters have under-estimated the cost of the Medicaid program by $202 million this year and $260.3 million next year, a total of $462.5 million in the biennial budget, reports the Richmond Times-Dispatch. Finance Secretary Aubrey Layne was at pains to explain that the added costs were not related to Medicaid expansion covering an estimated…
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How Bad Can It Get? You Don’t Want to Know.
The United States is enjoying 112 months of uninterrupted economic expansion. We’re basking in one of the longest business cycles in American history — the average expansion since World War II has lasted 58 months. Unless someone has repealed the laws of economics, sooner or later, we’ll experience another recession. There is a widespread belief…
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Local Governments’ Alarming Capital Spending Ratios
I’ve been strenuously making the point over the past several months that there are many ways for state and local governments to run hidden deficits. One of those is deferred maintenance — an issue that has played out most prominently in the debate over aging, run-down school buildings. What I never realized is that there…
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Moody’s: Virginia Local Government Credit Quality Healthy despite High Debt Burdens
Moody’s, the bond-rating firm, has disseminated a new report on the credit quality of Virginia local governments — answering many of the questions we have been posing on this blog. The good news is that Moody’s rates Virginia’s business climate highly and says that local governments have “wide latitude” to protect their bond ratings by…
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Virginia Ill Prepared to Weather a Recession
I’m not sure how Virginia’s Secretary of Finance, Aubrey Layne, sleeps at night. He is by nature a fiscal conservative, and he was in frequent touch with the rating agencies that threatened earlier this year to downgrade Virginia’s prized AAA bond rating. While elected officials may ignore the fiscal warning signs, it’s Layne’s job to…
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Virginia Unfunded Liabilities: $5.4 Billion
Here is more confirmation, as if any were needed, that the Commonwealth of Virginia is running hidden deficits in the form of unfunded pension and retiree healthcare liabilities… Truth in Accounting, a nonprofit devoted to transparency of government finances, gives Virginia a grade of “C” for its financial practices. By the standards of the 50…
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Chesterfield’s $50 Million Fiscal Landmine
Virginia and its local governments are constitutionally obligated to balance their budgets ever year. But as I have repeatedly pointed out, there are many ways to duck that obligation. One is to rack up unfunded pension liabilities. Another is to under-fund maintenance. Today we discover that even a highly reputed county with a AAA bond…
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Oops, Where Did that $3-4 Million Deficit Come From?
The idea behind the Commonwealth Center for Advanced Manufacturing (CCAM) is fantastic: Create a facility where Virginia manufacturers and universities can collaborate on advanced-manufacturing research projects that all participants can share. Research staff for the Prince George County-based facility are expert in everything from “vertical diffusion furnaces” and “robot arm-based automation cells” to “thermal spray…
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Virginia Ranks 13th Best in Fiscal Condition
The Commonwealth of Virginia’s fiscal condition ranked 13th among the 50 states in FY 2016, according to data in the Mercatus Center’s “Ranking the States by Fiscal Condition” report released today. The Mercatus methodology incorporates 13 financial indicators falling in five buckets: cash solvency, budget solvency, long-run solvency, service-level solvency, and trust fund solvency. Here…
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Hurricanes, Risk, and Fiscal Collapse
John Rubino, publisher of Dollarcollapse.com, and I think a lot alike when it comes to the inevitable fiscal collapse of the United States. The country (indeed the globe) is riding high today on a giant credit bubble right now, but sooner or later the bubble will pop and the economy will crash. If you buy…
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Has NoVa Finally Woken Up?
[youtube https://www.youtube.com/watch?v=OUPWeuVHDcc?rel=0&w=560&h=315]VA-10. State Senator Jennifer Wexton (D) hopes to unseat Congresswoman Barbara Comstock (R) in Virginia’s 10th Congressional District. A typically gerrymandered Virginia district, the 10th stretches from inside the Capital Beltway to well west of Winchester. As a resident of the 10th I watch the elections in that district closely. This one is shaping…
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Virginia and the Next Global Debt Crisis
Ten years ago the Lehman Brothers debacle precipitated the financial meltdown we associate with the Great Recession, and the financial media are full of retrospectives. A key question is what lessons we learned from the epic failure. The main conclusion drawn, according to Daniel J. Arbess in the Wall Street Journal today, appears to be…
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The Logic Behind Northam’s Plan for Spending the Tax-Reform Windfall
The starting point for understanding the Northam administration’s logic behind divvying up the tax windfall from federal income tax reform is the conviction that Virginia cannot count on the personal and corporate tax cuts lasting more than a few years. Democrats may regain power in Washington, D.C., and reverse the tax cuts, or at the…
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Weak Growth Makes Conformity Revenue Tempting
I called it correctly back in June: Conformity to federal tax reform produces a major boost in state revenue which the state’s leadership on both side of the aisle is strongly tempted to keep because the state remains strapped for cash. The signs of economic stress are all over Secretary of Finance Aubrey Layne’s August…