Bacon's Rebellion

Democracy Thrives in Sunlight

Virginia’s Fiscal Condition: Average

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by

James A. Bacon
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Source: Mercatus Center, George Mason University
Source: Mercatus Center, George Mason University

Virginians persist in the belief that the commonwealth is an exceptionally well managed state with lower-than-average taxes, better-than-average services and rock-solid finances, as exemplified by its AAA bond rating. But there’s more to a state’s fiscal health than its ability to repay bonds. Sarah Arnett with the Mercatus Center rates the fiscal condition of the 50 states and finds Virginia right smack in the middle of the pack, in 25th place.

The overall ranking is a composite of four specific indices based on 2012 Comprehensive Annual Financial Report data: cash solvency (states with  more cash on hand score better), budget solvency (ratio of revenue to expenses), long-run solvency (the ability to meet long-term obligations such as pension benefits and infrastructure maintenance), and service-level solvency (reflecting the ability to provide citizens with an adequate level of services).

Read the details in “State Fiscal Condition: Ranking the 50 States.”

Update: Tim Wise provides more in-depth analysis of the numbers over on the Growls blog. 

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13 responses to “Virginia’s Fiscal Condition: Average”

  1. Tysons Engineer Avatar
    Tysons Engineer

    Haha, again these reports I swear.

    So this is a report on how austere a state is, not how well managed it is. In many cases being austere has held states back from reaching their potential.

    Any report that puts California, which last I checked has a 10 ten economy (for countries in the world) behind North Dakota is smoking the whacky weed.

    North Dakota has seen an oil boom, which has made its current economy look pretty good, but it has no future potential. Eventually that runs out, and what do they have? Terrible education, terrible diversity in industries, terrible infrastructure.

    I’d rather be the person with upside potential in my career, than the one who has hit the glass ceiling but penny pinches to make the most of it. Google will never be a company that starts in North Dakota.

    Good report on austerity though.

  2. James A. Bacon Avatar
    James A. Bacon

    California has a large economy, to be sure, but prosperity is exceedingly uneven. It has the world’s strongest economic engine in San Francisco/San Jose and a couple of sputtering engines in L.A. and San Diego, and the rest of the state is pretty well going to hell. Despite raising taxes, California is eating its seed corn, starving its schools, universities and infrastructure (except high-speed rail!). Non-tech industry is fleeing. The middle class is leaving. Three or four municipalities have filed for bankruptcy, and a dozen more are teetering on the edge.

    You mock “austerity” but profligacy is no path to sustainable prosperity.

    1. Tysons Engineer Avatar
      Tysons Engineer

      Profligacy under a conservative who wasted money on bad ideas instead of focusing on what California does best. Not to mention the areas outside of those you noted are the very ones, at a jurisdictional level, that do think small and austere.

      No one is pro-waste, yes even liberals are against it, but to cut off your nose to spite your face by some blind ideology is equally unwise when it means missing out on chances to be great. What has North Dakota done with its oil boom that makes non oil companies consider going there? And while a case can be made against California (the whipping boy of most conservative analysts) please indicate why New York should be right next to it at 45th?

    2. Tysons Engineer Avatar
      Tysons Engineer

      I would also add that if NY, Illinois, Penn, and California are in such rough shape then you must be real pessimistic about the country, because you just circled more than 50% of our nations GDP

      But who needs GDP or actual economy when you can drop your tax rates to nothing to rob dinosaur manufacturing from other states.

      1. James A. Bacon Avatar
        James A. Bacon

        As a matter of fact, I *am* real pessimistic about the country! Between the accumulated debt and chronic deficits, I think we’re in deep doo-doo. That’s one reason I keep harping on the necessity of *not* spending billions of dollars on wasteful infrastructure.

        1. Tysons Engineer Avatar
          Tysons Engineer

          Well then you better start telling those other 46 states to start pickin up the slack cause I can hardly blame California who pays more than they get back from the federal government for the problems of our economy and fiscal deficit (same with New York, Illinois, and Penn)

        2. Tysons Engineer Avatar
          Tysons Engineer

          To put in context, I don’t disagree with a lot of that. I definitely think that expanding our highway projects, throwing good money at bad rail projects, and other infrastructure expansion while our existing system is decaying is poor government policy. I just think that if you want to talk about real money disappearing you have to look at why the south is so dependent on government spending, welfare, and still poverty stricken. I don’t see that infrastructure expansion necessarily being the cause of that, I see cultural and educational issues at play as well as a lack of basic infrastructure in those areas.

          That being said, NY, Cali, Penn, and Illinois certainly make a lot of bad choices as well, but when you look into the actual jurisdictions involved it often begins with many bad and smaller choices. I find it hard to reconcile the fact that those 4 states are the US economy in many ways, while attempting to demonize them as being the problem also. Something that they have done over the past 200 years has clearly worked. They could surely learn some things from the balance sheets of other states but more often those other states could also take a note from LA, Chicago, NYC, and San Fran in growing an economy not just getting along with a commodity based, wealth funneling governance.

          1. larryg Avatar
            larryg

            re: ” I just think that if you want to talk about real money disappearing you have to look at why the south is so dependent on government spending, welfare, and still poverty stricken.”

            and yet they vote solid GOP!

        3. larryg Avatar
          larryg

          spending money on infrastructure is ..longer term.. beneficial…

          it’s more beneficial than paying a soldier to sit in a foxhole. then leave and cede it …

          it’s more beneficial than putting almost as many people in prison as we have in the military… more than any other country on earth.

          it’s better than giving the NSA money to capture our phone calls or the billions we spend on Gitmo to confirm to the rest of the world that we have our own Gulags…

          there are NO roads in the US that we have gated off because no one uses them! so when we talk about money down a rathole.. there are…”variations”.

  3. TMT Avatar
    TMT

    California lives from boom to bust cycles. It’s tax structure is so dependent on mega success by a rather limited number of individuals. When things are booming with them, the state coffers are bulging. But when hard times come to the elite, the state becomes a basket case. It’s a tough challenge for any governor.

    California has also be actively importing poverty to enable many to avoid paying fair prices for labor and to increase the size of the dependency class, which, in turn, keeps the public sector vibrant. But long-term, every tub must stand on its own bottom. The state of California is losing many of the middle class people needed for success. Jerry Brown has one helluva tough job to do.

  4. larryg Avatar
    larryg

    I was curious about the service solvency and not that surprised to see this:

    ” Although this
    analysis focuses on states’ abilities to meet service obligations as opposed to determiningwhether states are providing appropriate service levels, isolating the most appropriate measures is not straightforward. Many factors not captured by financial data may affect a state’s ability to
    meet its service obligations. These factors include an increase in residents’ demand for services, state policymakers’ reluctance to increase tax rates, or the tax base’s reluctance to fund service increases. The first two indicators, tax and revenue per capita, assess the revenue and tax burden
    on state residents. Expense per capita assesses the cost of providing services to state residents”

    not actually assesses services in terms of quality and quantity while using taxes, revenues and expenses as proxies.. is a stretch.. a really convoluted way to derive the index.

    to not even look at things like parks , recreation, museums.. air and water pollution, etc..etc.. and to just use taxes, revenues, expenses as a proxy seems wrong.

    it’s almost if the less you tax and spend for this stuff – the better the quality of life…

    In most states the expenditures for things like these are chump change compared to education and transportation… anyhow… for a little extra money.. people have campgrounds across the state or a Science Museum that provides for thousands of kids… etc….

    not a surprise that it comes from the Mercatus Center which pretty much sees government as more of a detractor of human satisfaction rather than an enhancer and that money in the hands of individuals is better than money in the hand of government – even for “services”.

    1. TMT Avatar
      TMT

      If we had more transparency and the friggin media didn’t go orgasmic every time government spends money, we’d be in better shape. If everything that happened with the Silver Line and Tysons-related promises saw the light of day, we’d be seeing the US Attorney’s office before a grand jury.

      With an alleged $150 M school deficit, the Fairfax County BoS voted to purchase the Lorton Arts Center from a nonprofit cuz it was losing money. The nation is full of similar examples.

  5. larryg Avatar
    larryg

    the twin financial gorillas in most State and Local budgets are MedicAid and Education.. most other things are down a notch or two.

    To this point – there are few school districts in Va where the torch and pitchfork crowd demand reduced spending…

    MedicAid is one of those things that the average person has no clue how to mount opposition to and even if they did, the optics would be terrible.

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