The Commonwealth of Virginia can issue another $467 million in debt in FY 2012 and a like amount in FY 2013 without undermining its AAA bond rating, reports Debt Capacity Advisory Committee in its latest guidance to the Governor and General Assembly.
Under the committee’s guidelines, debt-service payments cannot exceed 5% of annual “blended” revenues (which include General Fund revenues, Transportation Trust Fund revenues, ABC profits and other, smaller revenue sources).
State debt has more than doubled in the past six years, increasing from $5.8 billion in fiscal 2005 to $11.9 billion in fiscal 2011, reported the Loudoun Times in November. Annual interest payments have increased even more rapidly, from $236 million in 2005 to a projected $593 million in 2012.
Before someone in the McDonnell administration or the General Assembly comes up with a bright idea for how to exploit that unused debt capacity, let’s make sure we get off-the-books debt paid off first. Like unfunded obligations to the Virginia Retirement System and borrowing from the federal government to maintain the Unemployment Trust Fund.
Speaking of the Unemployment Trust Fund, which hasn’t garnered much attention, here’s the latest report filed by the Virginia Commission on Unemployment Compensation. The state borrowed $668 million from the feds since the recession in order to continue paying unemployment benefits and is expected to borrow another $196 million by April 2013. Virginia is expected to repay the outstanding balance by May 2012. “However,” states the report, “Virginia is expected to resume borrowing for the first four months of 2013. In May 2013, these funds will be repaid by a final $70 million payment. ”
Let’s not push our luck, I say. Let’s make certain we can meet our existing obligations before we take on any more.
– JAB