Over the past five “Boomergeddon in Virginia” posts, I have systematically laid out the findings of the “Report of the State Budget Crisis Task Force” as they pertain to the Old Dominion. It’s a dismal picture. The tax base is eroding. Medicaid spending it out of control. Cutbacks in federal spending will slam both Virginia’s budget and its economy. Unpaid pension and retiree health-care obligations are still significant.
It could be worse. It could be a lot worse. We could be California. Or Illinois, New York or a host of other ill-managed states. Despite the inclination of Virginia legislators to employ budgetary sleight of hand — short-changing payments to the Virginia Retirement System and accelerating tax collections from major retailers — we have at least stopped resorting to such misdeeds now that we’re out of the recession. Budgeting and capital planning remains one of Virginia’s strengths.
But state budgeting is a slippery slope and there is no assurance, if the economy tanks again, that our legislators won’t fall back upon the same abominable gimmicks as before — or adopt tricks pioneered by other states. As I have warned many times, we must redouble our efforts now, while the economy is still growing (albeit weakly), to bullet proof our budget against calamities to come.
Tweaking the budget and tax code, while absolutely necessary, will get us only so far. The deeper problem, not addressed in the Task Force study, is that key institutions — K-12 education, higher education, health care, transportation and land use — are showing their age. Unable to adapt to dramatic changes in technology and society, these institutions are being rendered increasingly dysfunctional across the nation. We cannot prop them up by pumping more money into them. As the Volker-Ravitch analysis has made clear, there is no more money now and there will be none in the future.
We can no longer tolerate pumping more money into K-12 schools and getting the same old mediocre results. We can no longer tolerate runaway costs in tuition and fees that make college unaffordable to all but the wealthy and the scholarship-worthy poor. We can no longer tolerate out-of-control increases in health care costs that cripple small business, bankrupt middle-class families and strain government budgets to the breaking point. We can no longer tolerate scattered, disconnected, low-density human settlement patterns that aggravate traffic congestion and drive up the cost of local government services.
This is not a time for incremental reform. The 80-year experiment in the democratic welfare state is collapsing all around us. Europe is falling apart at the seams. Japan is sliding into senescence. The U.S. debt, now $16 trillion and increasing at the rate of $1 trillion a year during the growth phase of an economic cycle, is unsustainable. The federal leviathan is a lost cause — there is no saving it, regardless of whom the nation elects as president in November. The mantle of democracy will pass to the states. Some will fail utterly. Some will muddle through. Those that think boldly and act energetically to reinvigorate core institutions will define the future. Which course will Virginia take?
Special thanks to criminal attorney Thomas Soldan for supporting Bacon’s Rebellion.