What is the state of Virginia’s financial health? One watchdog group gives the Commonwealth a grade of C for average.
Virginia has $43 billion of bills to pay but only $40 billion in the bank. As a result, the Commonwealth has to borrow money for $3 billion in unpaid bills, mostly unfunded pensions and retiree healthcare costs. That’s why Bill Bergman at Chicago-based Truth in Accounting ranks Virginia at number 16 among the states, not as bad as most states. But still in the red despite maneuvers he considers accounting tricks.
“If it borrows money and puts it in the general fund, it makes it look like the general fund has a surplus," Bergman explains. "That helps explain why Virginia, like other states, in fact does not have a surplus. It has a deficit.”
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Back in the 1920s, state Senator Harry Byrd of Winchester was elected governor on a platform of refusing to borrow money to build state highways. Now the days of pay as you go are over.
"That era is over because it didn’t make sense and it was unfair,” says Frank Shafroth at George Mason University. “Whether it’s a penitentiary, whether it’s a highway, whether it’s a public hospital, whatever it is part of the concept in public finance is the beneficiaries are going to pay for it over time in as equitable a manner as possible.”
He notes that even with that $3 billion in unfunded liability, Virginia is one of only 14 states with a AAA credit rating.
This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.
