Bacon's Rebellion

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Virginia Ranks 19th for Fiscal Condition

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by

James A. Bacon
in

Graphic credit: Mercatus Center
Graphic credit: Mercatus Center

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 average in trust fund solvency (pension funds and long-term debt), and 5th best in service-level solvency (the ability to raise taxes and increase spending without damaging the economy). Summarizes the Virginia state profile:

Total liabilities are 30 percent of total assets. Total debt is $6.86 billion. Unfunded pension liabilities are $87.66 billion, and other postemployment benefits (OPEB) are $5.19 billion. These three liabilities are equal to 24 percent of total state personal income.

Virginians tend to think that the state’s fiscal condition is fine as long as the Commonwealth maintains a AAA bond rating. Mercatus, which admittedly is funded by the Koch brothers but has no particular ax to grind against Virginia, suggests otherwise.

— JAB

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2 responses to “Virginia Ranks 19th for Fiscal Condition”

  1. LarrytheG Avatar
    LarrytheG

    I guess I would think that if a State has “flexibility” in raising revenues that – that actually is as good as a cash reserve.

    and there are consequences because we saw just this past month: ” A 3 percent pay raise scheduled for state employees and college faculty could be delayed or lost if Virginia’s lagging revenues don’t catch up to projections by the end of June.”

    The only problem I have with the Koch Bros and GMU and the Mercatus center is what their money is being spent on and if it is salaries – whose salaries and what role the Koch Brothers play in decisions about what research to be conducted and analysis and studies done.

    Any such study should be clearly labeled as to where the funding came from.

    So the obvious question is – the author of this study – Eileen Norcross and Olivia Gonzalez – are they University employees and the report was funded by what organization? Ms. Norcross apparently was previously employed by the Competitive Enterprise Institute (and disclosed) which does have a specific viewpoint about the role of government.

    Comparing the Mercatus report ranking with AAA rankings does not get a 100% match… For instance, South Dakota is ranked high on the Mercatus report but does not have a AAA rating.

    For me – the information I found most trust-able is when several different organizations and reports end up with some level of agreement about which states are “good” and there are agreement on the categories and category ratings…. and this report seems more or less consistent –

    and I found this one to be pretty good because it shows some history

    http://www.pewtrusts.org/~/media/legacy/LEGACY-and-PRE-LAUNCH-IMAGE-EDITS/SLN0609topstoryStateCreditRatings2014outlined060514.jpg?la=en

  2. LarrytheG Avatar
    LarrytheG

    well – it sure didn’t take long for this analysis to turn partisan!

    ” Best-Run States Are Heavily Republican, Study Finds”

    The ten most financially sound states in the country are all heavily Republican, while all but one of the ten worst states are heavily Democratic. That’s according to a ranking of states in a new report from the Mercatus Center at George Mason University

    http://www.investors.com/politics/commentary/best-run-states-are-heavily-republican-study-finds/

    http://www.investors.com/wp-content/uploads/2016/05/CapHill55_053116-640×360.jpg

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