Category: Government Finance
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Boomergeddon Update: Medicare HI
by James A. Bacon The Hospital Insurance Trust Fund, one of the four major components of the Medicare program, will run out of money in 2028 — two years earlier than previously projected. That appraisal comes from the Medicare Board of Trustees, which, the last time I checked, is not funded by the Koch Brothers. The news…
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Virginia’s New Road Funding Process — Less Political but Still Opaque
by James A. Bacon In a rare bipartisan achievement, Virginia is doing something that no other state in the union is doing: basing its transportation investments on an objective scoring system. Earlier this month, the Commonwealth Transportation Board (CTB) approved $1.7 billion to be spent on 163 projects selected through the System for the Management and Allocation…
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Virginia Procurement Process Needs Reform
by James A. Bacon The Commonwealth of Virginia needs to reform its procedures for contracting and administering billions of dollars of contracts, the Joint Legislative Audit and Review Commission (JLARC) has found in a new study. In 2015 Virginia spent more than $6 billion through contracts, including for transportation projects, information technology, and building construction,…
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Virginia Ranks 19th for Fiscal Condition
Virginia’s state finances are nothing to brag about, according to data contained in the Mercatus Center’s 2016 edition of “Ranking the States by Fiscal Condition.” The Old Dominion gets below average scores for cash solvency (cash on hand to pay short-term bills), and middle-of-the-road scores for budget solvency and long-run solvency. The state scores above…
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Reader Alert: Another Jeremiad about Debt and Risk
Holman W. Jenkins, Jr., at the Wall Street Journal reminds us how countries around the world, including the United States, are doubling down on debt to stave off recession: The Richmond Fed’s “bailout barometer” shows that, since the 2008 crisis, 61% of all liabilities in the U.S. financial system are now implicitly or explicitly guaranteed…
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Mala Suerte, Puerto Rico
by James A. Bacon The U.S. territory of Puerto Rico, like several American states, has forged a facsimile of prosperity by borrowing and spending beyond its means. Earlier this year, independent bond-issuing authorities began defaulting on their debt. Investors fear the territory will fail to make payments on General Obligation bonds coming due in May and June. Not…
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Buena Vista: the Canary in Virginia’s Fiscal Coal Mine
by James A. Bacon The City of Buena Vista, which defaulted in 2014 on a $9.2 million bond issue to pay for a golf course that was supposed to spur growth in the city, has received some good news. It will be allowed to keep its city hall. For now. The office building, along with…
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Your Federal Tax Dollars at Work
And I thought the City of Richmond was incompetent for its inability to close out its financial books in a timely manner! Heed this opinion from the federal Government Accountability Organization (GAO) on Uncle Sam’s financial statements for 2014 and 2015: “Certain material weaknesses in internal control over financial reporting and other limitations on the scope of…
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Your Federal Monetary Policy at Work
by James A. Bacon Pension funds and individual savers aren’t the only groups finding it difficult to generate decent investment returns in the current near zero-interest rate environment. Data gathered from 812 colleges and universities show that participating institutions returned an average of only 2.4% (net of fees) in 2015, contributing to a decline in their…
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Threading the Needle on Long-Term Debt
by James A. Bacon Virginia has more than tripled its tax-supported debt over the last decade, according to the December 2015 report of the Debt Capacity Advisory Committee, but the state still has enough capacity to support the issuance of another $603 million per year in added debt in Fiscal years 2016 and 2017 without undermining…
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Boomergeddon Update: Deficits Rising Again
by James A. Bacon Blame who you want for this sad state of affairs — it’s always the other guy’s fault, right? — but after six years of shrinking federal government deficits, red ink is on the rise again. And unless Congress enacts significant budget reforms, deficits will get worse every year pretty much forever…
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Slaying the Debt Dragon – or Feeding the Beast?
by James A. Bacon There aren’t many things that almost everyone across the ideological spectrum agrees about, but one of them is that indebtedness from student loans is out of control. Here in Virginia, about one million students owe roughly $30 billion, according to the Richmond Times-Dispatch — or about $30,000 each on average. The loan…
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$1 Billion in Bonds for R&D Initiatives
by James A. Bacon Governor Terry McAuliffe has unveiled a $2.43 billion bond package, about $1 billion of which will go to Virginia colleges and universities for technology initiatives. “The bond package represents the largest research-oriented capital investment in the Commonwealth’s history as well as the largest state investment,” states the press release issued by the…
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Meanwhile, Virginia’s Debt Service Has Doubled
Debt service on bond issues, mainly for higher education and transportation, has been a major driver of state spending over the past 10 years. The repayment of interest and debt has increased in absolute numbers and as a percentage of total blended revenues — from $385 million (or 2.57% of revenues) in FY 2005 to $836…
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An Era of Spending Restraint? Really?
by James A. Bacon After a decade of severe recession, sequestration and sub-par economic growth, Virginia state spending still increased 15% overall when adjusted for inflation and population growth. The spending increase occurred in the Non-General Fund, more than offsetting the squeeze in the discretionary General Fund, according to data published recently in the “State Spending: 2015…