Category: Government Finance
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This Is What a Fiscal Meltdown Looks Like, Part V: Big Legal Fees
As creditors close in and the City of Petersburg struggles to avoid default, it is spending large sums on legal and consulting fees. In the latest litigation, the city has hired the Richmond-based law firm Sands Anderson to fight an Oct. 4 order by a Petersburg Circuit Court Judge appointing a special receiver to ensure…
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After Fixing this Budget Shortfall, What Comes Next?
As state revenues continue to lag projections, Governor Terry McAuliffe announced yesterday his plan to balance the FY 2017 budget. The plan implements three main strategies: eliminating $125 million in budgeted pay increases for state employees, withdrawing $392 million from the revenue stabilization fund, and scraping together unspent fund balances and agency spending cuts to cover…
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Don’t Forget the Bond Referenda
by James A. Bacon While the U.S. presidential election degenerates into a parody of a banana republic (I hope I’m not insulting banana republics by saying that), Virginia voters may be tempted to avoid the polls. Neither one of Virginia’s two U.S. Senate seats are up for bids, after all, and congressional districts are so gerrymandered that throwing…
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Needed in Virginia: A Fiscal Early Warning System
by James A. Bacon In the wake of the City of Petersburg’s fiscal meltdown, the General Assembly has appointed Del. R. Steven Landes, R-Augusta, to head a subcommittee to study how other states deal with fiscally stressed localities. In surveying best practices in other states, it’s a good bet that Landes will familiarize himself with a new…
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No State Bailout for Petersburg
by James A. Bacon The City of Petersburg is on its own. There appears to be no sentiment in either the McAuliffe administration or the General Assembly for cutting the fiscally ailing city any slack. Even the city’s own representatives in the legislature aren’t pushing for any special treatment by the Commonwealth. “There is a…
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This Is What a Fiscal Meltdown Looks Like, IV: The State Intercepts Your Aid
by James A. Bacon The City of Petersburg’s fiscal meltdown is reaching a new crisis stage as an Oct. 1 deadline nears to make a $1.4 million payment to the Virginia Resources Authority (VRA), a state funding source for local infrastructure financing. In remarks to the Richmond Times-Dispatch following a House of Delegates Appropriations Committee hearing yesterday,…
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Don’t Short-Change Our Troopers
by James A. Bacon The Virginia State Police face a severe manpower shortage: Veteran police are resigning faster than recruits can be trained. In the first nine months of this year, reports the Richmond Times-Dispatch, 103 sworn employees and 76 civilian employees have left the department. Meanwhile, applications to join the state police have fallen…
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No Magic Bullets, Just Hard Work
by S.E. Warwick The fiscal perils of Petersburg are not unique. Five years ago Goochland County was in similar disarray. Then ten citizens, serving on a newly elected board of supervisors and school board, stepped forward to transform the county government from a dysfunctional mess into a model for the region. The turn-around, a great untold…
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This Is What a Fiscal Meltdown Looks Like, III: Eating the Seed Corn
Poor Petersburg. Financial consultants are advising City Council to save $300,000 this year and $400,000 next year by shutting down three museums and two tourism centers as part of a draconian plan to slash a projected $12 million budget deficit and work down a $19 million backlog in unpaid bills. (Read the details in the Richmond…
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Good News and Bad News for Virginia’s Finances
by Tim Wise First, the bad news. The Richmond Times-Dispatch’s Michael Martz reported Thursday that “Gov. Terry McAuliffe will announce a shortfall of roughly $1.5 billion in the two-year state budget to the General Assembly money committees on Friday.” Martz explains: “The governor will reduce anticipated revenues by about $850 million in the current fiscal year…
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Follow the Money, If You Can
by Sara Carter With all the negative headlines about local government budgets these days, many people would like to know how to tell if their locality is fiscally well managed or headed for trouble. Are there indicators that can tip us off that finances are deteriorating before the situation spins out of control? Local budgets…
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A Free Market Alternative to Payday Lenders
by James A. Bacon Most everyone recognizes that payday lenders create a poverty trap for poor and working class Virginians. While the lenders do provide a valuable service by extending short-term loans for emergency situations, the annualized interest rates are extremely high, and borrowers often find themselves rolling over their loans from month to month…
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Stick It to the Hedge Fund Managers!
by James A. Bacon One of the voices urging reform of the Virginia Retirement System (VRS) is a semi-retired University of Virginia economics professor, Edwin T. Burton III, who served 18 years on the board. He argues that the VRS pays too much in management fees to outside investment firms that pursue labor-intensive strategies and should rely on low-overhead…
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Digging into Rate-of-Return Assumptions
by James A. Bacon House Speaker William J. Howell is rightfully concerned about the long-term health of the Virginia Retirement System. The pension system’s own actuary estimated a year ago that the $68 billion retirement system has unfunded liabilities of $22.6 billion. On Sunday, the Richmond Times-Dispatch’s Michael Martz described the debate over restructuring the VRS from a…
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Virginia Retirement System — Trouble Ahead
Last week as I was watching the business channel, I was very interested in the comments of AIG’s head of investments about the effects of low interest rates on his firm. For those involved in life insurance and other long-term products, today’s historically low interest rates pose a significant problem. With negative rates on investment-grade…