Boomergeddon in Virginia: the Volker Analysis

In case you took heart from Virginia’s paltry budget surplus from FY 2012, a new study, “Report of the State Budget Crisis Task Force,” should dispel the delusion that Virginia state and local governments face anything but years of grinding austerity ahead.

“The ability of the states to meet their obligations to public employees, to creditors and most critically to the education and well-being of their citizens is threatened,” warns the study group headed by Paul Volker (yes, that Paul Volker, the former Federal Reserve Board chairman) and Richard Ravitch, a former lieutenant governor of New York and a Democrat. Neither gentleman, it should be pointed out, is affiliated with a right-wing, Kohl Brothers-funded think tank.

Taking a deep dive into the budgets and balance sheets of six major states, the task force found six major fiscal threats that apply to all six, including our beloved AAA-rated Commonwealth of Virginia.

  • Medicaid spending is crowding out other needs
  • Federal deficit reduction threatens state economies and budgets
  • Underfunded retirement promises create risks for future budgets
  • Narrow, eroding tax bases and volatile tax revenues undermine state finances
  • Local government fiscal stress poses challenges for states
  • Budget laws and practices hinder fiscal stability and mask imbalances

This document is so important for understanding Virginia’s long-term budget challenges, I will detail key findings in future posts.


Special thanks to DUI attorney Vanessa Hicks for supporting Bacon’s Rebellion.

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  1. well, it’s called “belt tightening”.

    re: Medicaid spending is crowding out other needs

    it’s true but it’s not as simple as people are led to believe.

    MedicAid is Universal Health Care but not on the cheap. MedicAid symbolizes the problem that we have with health care in general in that no matter what program pays for health care, MedicAid, MedicCare, or private systems, the problem is the same and instead of us actually confronting the issue – we “blame” MedicAid.

    Virginia has the ability to reject much of Medicare – in fact, Va is one of the stingiest states in the union for Medicare.

    I had commented in a a prior post that if you add up ALL of our education funding, it EXCEEDS, Medicare but we continue to evade the realities both with MedicAid and Education.

    We pay way too much for education – not because we should not be funding it – we should IMHO but we fund the wrong things way too rich and doing so is costing us dearly.

    We simply cannot afford to do what we are doing and we simply refuse to make the hard decisions that we must make or they will be forced upon us sequestration style.

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