Five Localities under Severe Fiscal Stress

Petersburg isn’t the only Virginia locality with serious fiscal problems, according to an analysis prepared by the Auditor of Public Accounts. But Auditor Martha S. Mavredes isn’t willing yet to publicly identify the other two cities and two counties that appear to be in bad shape, according to the Richmond Times-Dispatch.

The fiscal assessment, conducted at the request of the General Assembly, uses data filed in local governments’ Comprehensive Annual Financial Reports to develop ten financial ratios, including four that measure the health of the locality’s general fund. The scoring system establishes 16 as the minimum threshold for fiscal stability. Petersburg and another city, identified only as City A, scored below 5. Yet another city and two counties also scored below 16, while two localities, Hopewell and Manassas Park, have yet to submit financial data for 2016.

Mavredes made the presentation Monday in a meeting with a newly established joint legislative subcommittee on fiscal stress. She asked for time to notify the jurisdictions of their scores and to begin discussions to confirm that the financial assessments were accurate.

A major question was when the data should be made public. Sen. Emmett W. Hanger, Jr., subcommittee chair, said that it would be premature to identify localities before notifying them and verifying the numbers used to assess their condition. But others stressed the value of making the data public. “Knowing and not taking any affirmative actions is almost malfeasance,” said House Appropriations Chair S. Chris Jones, R-Suffolk, a former city mayor.

According to the T-D:

“City A” scored below the threshold the past three years, dropping to 4.25 last year.

“City B” dropped from a score just under 50 in 2014 to between 13 and 14 in each of the past two years.

“County A” shows “consistently low” scores, in the 6 to 8 range.

“County B” tumbled from a score of 21 in 2014 to just over 11 last year.

Two other counties showed steep declines over the three years surveyed, falling to just above and below the 16-point threshold.

Bacon’s bottom line: Mavredes is right to confirm the data before sparking a political turmoil. And she’s right to inform the localities of their low scores before informing the general public — they need an opportunity to get their act together before the bad news drops. On the other hand, Jones is certainly right to say that the sooner this data is made public the better. Localities should not be allowed to sweep their problems under the rug, allowing their situations to deteriorate even further.

One more point: I hope the Auditor of Public Accounts makes the scores available for all jurisdictions. The public should know whether their local government is in strong condition or on the financial edge. Everyone can benefit from the state’s analytical tools, not just localities in crisis.

Update: Tim Wise pointed me to the following chart included in materials submitted to the Joint Subcommittee on Local Government Fiscal Stress. These classifications, which are based on FY 2014 data, reflect revenue capacity, revenue effort and median household income.

Most of the severely stressed localities are cities — not just mill towns with an eroding economic base but a cluster of local governments — older cities, mostly — in Hampton Roads.

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2 responses to “Five Localities under Severe Fiscal Stress”

  1. LarrytheG Avatar

    So.. what justifies the State looking over the localities shoulders any more than the Feds looking over the States’s shoulders?

    Isn’t it up to local voters to hold their elected accountable for being transparent with their finances and not have to rely on the Imperial Clown Show to pass laws forcing the localities to bow to the State to force them to do this?

    is this the same state that people say is corrupt and incompetent and, in fact, wastes our tax dollars on stupid stuff like METRO and failed economic development “incentives”… PPTA disasters, and they can’t even force the Universities to charge reasonable tuition?

    what gives them the right to tell localities how to do business?

  2. LarrytheG Avatar

    oh come on.. surely someone is going to say this is a GOOD THING!


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