In case you took heart from Virginia’s paltry budget surplus from FY 2012, a new study, “Report of the State Budget Crisis Task Force,” should dispel the delusion that Virginia state and local governments face anything but years of grinding austerity ahead.

“The ability of the states to meet their obligations to public employees, to creditors and most critically to the education and well-being of their citizens is threatened,” warns the study group headed by Paul Volker (yes, that Paul Volker, the former Federal Reserve Board chairman) and Richard Ravitch, a former lieutenant governor of New York and a Democrat. Neither gentleman, it should be pointed out, is affiliated with a right-wing, Kohl Brothers-funded think tank.

Taking a deep dive into the budgets and balance sheets of six major states, the task force found six major fiscal threats that apply to all six, including our beloved AAA-rated Commonwealth of Virginia.

• Medicaid spending is crowding out other needs
• Federal deficit reduction threatens state economies and budgets
• Underfunded retirement promises create risks for future budgets
• Narrow, eroding tax bases and volatile tax revenues undermine state finances
• Local government fiscal stress poses challenges for states
• Budget laws and practices hinder fiscal stability and mask imbalances

This document is so important for understanding Virginia’s long-term budget challenges, I will detail key findings in future posts.

— JAB

Special thanks to DUI attorney Vanessa Hicks for supporting Bacon’s Rebellion.