Virginia prides itself on being a state that has a balanced budget. But, that doesn't mean the Commonwealth is without debt.
Pay as you go. That’s been the mantra in Virginia state government ever since Harry Byrd ran for governor back in 1925. That does not mean that Virginia has always been able to pay all its bills, though. In fact, the Commonwealth has pushed the cost of past services on to future taxpayers.
“Those decisions that were made were in a budget accounting and overall financial reporting framework that effectively maybe didn’t quite tell the truth," says Bill Bergman at a group known as Truth in Accounting.
He says we now have much more visibility into these numbers because in 2015, the Governmental Accounting Standards Board started requiring states to include their net pension liability as a debt on the balance sheet.
“Virginia is actually not as bad as many states on this score, but it is a significant issue and we estimate as of the latest possible balance sheet date that Virginia has more than $7 billion of debt it owes in the future on a present value basis,” Bergman explains.
Frank Shafroth at George Mason University says the future of all that debt is uncertain.
“It’s a difficult task now because the coronavirus is changing all of that," he says. "We don’t know how significant the death rate will be, and it will have sort of this dual effect, right? A lot of people are going to die before they ever get to take their pensions.”
Overall, Truth in Accounting gives Virginia a C for its finances mainly because each taxpayer’s share of all those unpaid bills is $800.