Boomergeddon in Virginia: Yes, It Can Happen Here, Too

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.

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  1. DJRippert Avatar

    “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.”.

    I really think you should stop writing things like this. Those states are not buoyed by a torrent of federal spending.

    If you subtract the growth in federal spending in Virginia since 2000 I suspect that Virginia would be in just the same situation as these “ill-managed states”.

    While you do a great job reporting about the situation in Virginia and you run what seems to be the only blog that supports both right-of-center and left-of-center opinions – you spend a lot of time looking in the rear view mirror. How will Virginia look if federal spending in Virginia were rolled back to 2000 levels? I think it will look a lot like Illinois.

    California, New York and Illinois all have vibrant private sector economic engines. Virginia does not. This so-called Great Recession will end – just like all recessions end. However, the end of this recession may very well be accompanied by a major decrease in federal spending. I think it’s quite possible that Virginia will be going backwards through the recovery while states like New York, California and Illinois are going forward. I wonder if, five years from now, blogs in California, New York and Illinois will decry the “ill-managed” state of Virginia.

  2. Don, I have blogged extensively about the dependence of Virginia’s economy upon federal spending. This is merely the latest among many: “Boomergeddon in Virginia: Federal Cutbacks.” Gosh, I’ve blogged on the topic until I’m blue in the face? Really, can I say any more?

  3. K-12 in Va is heavily funded at the local level and surprisingly, if I’m not mistaken, Va is the only state where the school boards do not set a tax rate but instead the BOS or City Council does.

    Also fuel taxes are separate from state income and expenditures but in Va – VDOT takes care of local roads whereas in most states the counties and cities do.

    Sales taxes are also shared by localities and locality schools – 1% to each, right?

    so if Va was/is to cut back – what would they cut back?

    It’s likely going to be cuts to K12, cuts to local law enforcement and probably devolution of local roads.

    At the state level, MedicAid and higher ED.. can’t see them cutting things like State Troopers but who knows.

    Over the longer run, we’ll see downsizing through attrition. The K12 French Teacher who retires will be replaced by an Online Course.

    The planned bypass around Podunk, Va will become the responsibility of Podunk and probably relegated to the dustbin.

    MedicAid will be cut, likely in the area where people with homes and other assets are transferring them to their kids instead of paying for nursing home care.

    In short, I see LOTS of opportunity for cuts as soon as we buck up and get our minds straight…. about it. I think many people are “ready” but our leaders are not leading.

    I think Va has tremendous opportunity to create high tech zones in at least NoVa, Charlottesville and Hampton Roads if not other urban areas BEFORE the Fed starts it’s inevitable downsizing and they can do it in part
    with online education – at least in the community college network if not at the higher Ed level.

    I do not see gloom and doom. I see opportunity.

  4. There’s plenty of opportunity — if we’re willing to take it. I’m no so confident that we are.

  5. reed fawell Avatar
    reed fawell

    Perhaps I state the obvious when I say the good news is that our circumstances are not like we’ve just lost a War, been devastated by it, and remain occupied by the Victor. Or that we have just suffered an equally devastating plague, pestilence, or apocalypse. Our problems are relatively small compared to these, and I believe they are largely self inflicted.

    Mostly, to my mind, the fix we’re in is the result of two primary factors:
    1/ a long string of poor government decisions whose adverse results are now growing cumulative to the point where they may spin beyond our control.
    2/ the natural tendency of large institutions to corrupt over time, particularly during the Days of Wine and Roses, without severe shakeup.

    What worries me most now is whether our body politic has the capacity to confront difficult choices and work through the challenges they present before we are hit by a true Cataclysmic event, whether it comes at us from the outside, or by reason of our own delay.

    And Frankly, tone and tenor of our current election process, magnifies my worries. At bottom though, I think current problems are political. And are solved by politics. Which Statement may be so general as to be worthless. Unless of course you get hit in the head to a real disaster. Which is possible at any time.

  6. I agree. It’s the politics that are to be feared. They have become so toxic that the only thing that gets done is what is necessary to prevent calamity and little more.

    And there is an irony in my mind and that is that in the age of the internet – we have a ton more data but sometimes precious little information. We’re actually even more tuned to sound-bites than real facts.

    I first became acutely aware of this when I realized how many people believe that the Trust Fund is what actually funds SS and the Trust Fund is replenished with general fund money.

    while that is technically true – the money is basically money that FICA loaned to the general fund to start with – and then got it back when it needed it to pay benefits.

    but somehow – people believe that the trust fund is almost broke and when it is “exhausted” it means that retirees will no longer receive ANY SS benefits.

    Of course when almost a third of one political stripe still think the President was born a Muslim in another country – you get the drift.

  7. reed fawell Avatar
    reed fawell

    “And there is an irony in my mind and that is that in the age of the internet – we have a ton more data but sometimes precious little information. We’re actually even more tuned to sound-bites than real facts.”

    Right – So much anger driven talking over one another.

    So few little facts, listening and effort at rationale discussion of opposing views. And it only gets worse.

    This place is an oasis.

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