In my Feb. 13 podcast, former Finance Secretary Steve Cummings explained the positive feedback loop between strong state finances and economic development. His observations about the fiscal flywheel effect are worth highlighting here. –JAB

Cummings: “The underlying premise here is growth. When you have a declining revenue stream, when you have declining population, you’re gonna have a really hard time running a government and running it effectively.

“Through the policies that the governor implemented, we’ve attracted companies, we’ve added 277,000 jobs over the term of the governor’s administration. There’s still 220,000 open jobs, not counting jobs that aren’t yet open, but 85,000 new jobs that are in the economic development pipeline to be delivered over the next five years. And that does not include the 40,000 construction jobs that are associated with them. So, when you put all that together, it’s like 600,000 people who still are looking to fill jobs and growth that’s coming. So, Virginia has jobs.

“This is the narrative that we think is fact-based and others don’t want to talk about. And the reality is that at 220,000, we have 1.6 jobs for every unemployed person in Virginia. Nationally, it’s under one. That dynamic is underlying your revenue stream because withholding is our biggest revenue source. And that is what can help the flywheel get going here, where we are successful in generating revenues that continue to grow and which allows us to fund other things and reduce taxes.

“You can look at a couple other key states here. North Carolina is the best example. They got that flywheel going five to 10 years ago, and they have been consistently reducing taxes while their budget has increased.”