Speaking of Long-Term Liabilities…

As a follow-up to my previous post about Virginia’s unfunded pension obligations, one might wonder how much long-term debt the commonwealth carries. According to Virginia’s Comprehensive Annual Financial Report (CAFR), the state has long-term debt of $29.5 billion.

Sixteen percent of that debt, or $4.7 billion, was incurred in Fiscal Year 2009.

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19 responses to “Speaking of Long-Term Liabilities…”

  1. what is the debt for? Is it primary pension fund obligations?

    If so.. how would a lot of that pile up all of a sudden in 2009?

    What happens when a state defaults?

    do the Feds come in and take it over with a state agency version of the FDIC?

    ha ha ha

    more likely.. they basically do the same thing that other governments do – they renegotiate the terms of what they owe – right?

    will the day come – when the Federal Gov or some State govts (surely not Va)… when they say: " you know that X dollars you get each month for Social Security and/or you pension?"

    "Well. you're not going to get the full amount for a while.. perhaps the foreseeable future"

    "how do you like those apples?"

    The US Govt and the Va govt are going to do the same thing that our revered private corporations do..


  2. We might actually see a new paradigm unfolding here.

    Corporations and State Government will offer TWO choices on your pension.

    1. – We'll pay you UP FRONT what we would normally keep and use to pay you later but it will be less than what we promise you.

    2. – we'll PROMISE to pay you MORE that we will up front right now – but there's a chance that we'll renege on our promise.

    pick your poison.

    oh wait.. they've already done that, haven't they?

    Defined Benefits already gave way to Defined Contributions.

    but those "contributions" were turned over to the credit default folks to use….

    fancy that… who can you trust anymore.

    How about we change defined contributions to MY money right now and I decide how to invest it instead of you?

    I supposed all of you Reagan/Bush lovers would prefer than I not bring up the fact that both of them would have given your Social Security money to the credit default charlatans also if they had their way.

    who can you trust anymore?

    Is the Va Pension problem partly (or wholly) due to the influence of the credit default chaos that has also ruined pvt pension plans?

  3. Anonymous Avatar

    It should be noted that there are millions in bonds that were approved by HB 3202 that have not been issued, mainly because the source to pay off those bonds is still tied up paying off the FRAN bonds issued by the Gilmore Administration in his attempt to solve the transportation crisis without raising taxes. Apparently more bonds will come for roads until the oil starts flowing from offshore, I-95/I-85 toll at the NC line are approved, and the ABC stores go private. All that new money should be available next year. Bosun

  4. good luck on the I-95/I-85 tolls. So far the Feds are not going for it. Pennsylvania has tried multiple times to get it for I-80 and so far no dice.

    But my question is – do ya'll count this as a "plan" from McDonnell or is this wishful thinking?

    what is "Plan B" if the tolls and offshore drilling ideas don't work out in the short term?

    Do you think liquor store profits alone in the next 4 years will fund transportation in Virginia?

    I don't think I ever heard a number for the liquor store revenues.

    Does anyone know?

    Are we talking about a few million or a bunch of money – a billion?

  5. here's something that might help McDonnell:


    18th Annual Highway Report
    The Performance of State Highway Systems (1984-2007)

  6. Virginia
    Overall Rank in 2007 – 12
    Overall Rank in 2006 – .16
    Overall Rank in 2005 – 18
    Overall Rank in 2000 – 14
    Performance by Category in 2007 Rank
    State-Controlled Highway Miles 3

    Bridges, Deficient or Obsolete 28

    Fatality Rate Per 100 Million Miles Driven 19
    Urban Interstate Congested 18
    Urban Interstate in Poor Condition 23
    Rural Interstate in Poor Condition 1

    the rest at:
    page 98

  7. Anonymous Avatar

    Larry – IF the R's take over Congress next mid-term, McDonnell MIGHT get permission to toll the interstates & get a few pennies from offshore oil [and maybe allow private rest stops]. But any meaningful transportation solution is years away simply because such projects take time. And any new projects will be concentrated where the votes are – NoVA & HR.

    The performance audit of VDOT, even if it is a gotcha audit, will uncover pennies. As Putney said, "Fraud, waste, and abuse is not a line item in the budget." Maybe if we rented the whole thing to Brown & Root to run, there might be some efficiencies. Like with the IT contract, huh?

    As this article says [http://tinyurl.com/ykatx77], increasingly the infrastructure debate has become left vs. right, which does not help address the $2.2 trillion needs nationwide. Bosun

  8. Thanks for the link!

    Yes… transportation is part of the great divide now days….as your link alludes to.

    but as far as I can tell, the tea party folks and their brethren are not lovers of tolls … in fact rather vociferous in their opposition…

    In fact, they dislike taxes and they also dislike deficit spending so I'm not sure what they do support other than the idea that somehow.. there just must be too much waste and abuse in govt and that a guy like McDonnell is going to get to the bottom on it and suddenly find a billion dollars worth of new money….

    Hey.. I'm curious to see what he is going to cut in the current VDOT budget to get the rest stops back open.

    9 million don't sound like much but most of VDOT is salaries and, let's say at 50K a job.. he's going to have to shed another 200 VDOT employee to get that 9 million.

    By the way, if you check Page 7 of this 2007-2008 VDOT budget, you'll see that the NoVa District gets 700+ million dollars out of the (was) $4 total VDOT budget and if you look a little closer you'll see that over 200 million is maintenance.

    Maintaining all the roads in NoVa is not cheap as much, if not most, of the maintenance cannot take place during normal daytime hours without chaos ensuing.

    So for many roads, they have to wait until after rush hour – set up a section road.. under Klieg lights then take it all down by morning rush hour.

    the brutal fact is that roads – the construction of, the maintenance and operation of are ungodly expensive in areas like NoVa as compared to less urbanized locales.

    NoVa WAS promised by McDonnell some sort of ability to capture more of their sales taxes for roads.

    I'm betting they have not forgotten that promise – and I'm also betting that if McDonnell comes through on that promise that there a line of other localities looking for the same deal will form instantly at his door.

    so… McDonnell has "bought" the transportation issue with his campaign rhetoric and he essentially promised to do it without raising taxes.

    That man is going on to bigger and better things than the Va Governorship if he can make good on his promises..!!!

    Heck.. he's gonna make Kaine look like a wimp..


  9. Waldo Jaquith Avatar
    Waldo Jaquith

    McDonnell's transportation plan claimed that $500M would come from privatizing the ABC. But that's bullshit math—he just took the total amount of money that the Wilder Commission thought could be saved in state government ($500M), cherry-picked one of the ways that money could be saved (privatizing the ABC), and claimed that privatizing the ABC would bring in $500M.

    I agree with McDonnell—we should privatize the ABC, not for the revenue, but because I think the state has no business being in the business of selling liquor, and I think a court will order that we divest ourselves of this line of business (meaning they'll go at fire-sale prices, since the state has to sell). But this $500M business is just dumb.

  10. Anonymous Avatar

    Too bad General Billy Mahone is no longer among the living. It might be time for Virginia to re-launch the Readjuster Party!

    The Commonwealth Transportation Board needs to be reformed. It functions as an enabler for real estate developers' wish list. And it's not alone. There is great political pressure for the Fairfax County Board of Supervisors to approve big increases in density at Tysons Corner that will require adding three interchanges on the Dulles Toll Road between the Beltway and just past Route 7 (an extension of Boone Boulevard) and five more lanes (three westbound and two eastbound) between Tysons and Hunter Mill Road to handle the crush of traffic that will occur when Tysons Corner grows to a mere 60 million square feet from 45 million square feet. Of course, at 84 million square feet, all local transportation facilities, including the Beltway and the Toll Road, fail – become totally gridlocked.

    What is more – to build the added lanes on the Toll Road, it is likely that the National Park Service will need to agree to transfer land from Wolf Trap Park for highway right-of-way. That means the influential Friends of Wolf Trap will need to bend over and grab their ankles.

    Also, MWAA's plan for debt service does not include building and paying for the operation of these additional facilities for the Toll Road. The additional facilities will include rebuilding and likely expanding the size of all sound walls too.

    VDOT needs to think of itself as a network operator and not just a road-builder. Improve the efficiency of the existing networks and then supplement key facilities in important locations that actually improve safety and traffic flow.

    The housing bubble has popped. The commercial real estate bubble is popping. We need to start living within our means.


  11. TMT is right. We, and VDOT, need to think in terms of transportation mobility instead of transportation funding to enable economic development.

    but I think ANY board "like" the CTB still performing that role of overseeing a centralized fund, will end up the same way as long as the members are politically appointed.

    When that fund runs low, their mischief is limited.

    If we decide to put more money back into that fund, they'll be back in business.

    We need to fundamentally change the way that we do transportation in Virgina as I'm sure anyone who reads here has heard me often.

    46 other states hold the localities and regions directly responsible for making transportation decisions and the way they do this is by telling them that local and regional roads are THEIR financial responsibility.

    That leaves the DOT the job of maintaining and improving the state network of roads – and much like our Interstate System, strict control of those roads (we know this a Primary roads) to preserve them for transportation utility and to not let them get co-opted for economic development purposes.

    We've taken some meaningful steps under Kaine, such as the requirement that big development proposals must be studied by VDOT and new and existing roads will be operated with "access management" principles.

    McDonnell has some running room here to move those reforms forward.

    A good step would be to tell places like Fairfax, (all localities), that if they have some whiz-bang idea of a development proposal then, that's GREAT! go for it… and make sure you get the transportation part of it done right also – with your money and/or the developers money – and not state money.

    And if that road is a primary/state level road, then the existing LOS must be maintained and not degraded.

    Most folks don't realize that the Federal MPOs operate on a rule that the CTB does not,

  12. … and that rule is … that the short range and long range lists of projects (the wish lists) …MUST be financially constrained.

    What that means is that the money for the roads on the list – has to be committed, available, and not a "we need to find the money for this road".

    It does not prevent holding external wish lists.. there will always be desire for more roads than there is money.

    but the constrained funding tends to drive more of a prioritizing process and really does put a focus on politically-motivated projects.

    It doesn't prevent them but everyone and their dog (including the public) knows what is going on when politics become involved.

    The MPOs, by the way, for the localities that have them – are how those localities get back their Federal gas tax.

  13. Anonymous Avatar

    Following up to a running comment of Groveton — intellectual property and Virginia's colleges & universities. Need – there is huge need for the VDOTs of this world and their local counterparts to be able to manage traffic signals to optimize traffic flow.

    Could anyone imagine the Verizons, AT&Ts, Comcasts or Level 3s not being able to manage their networks? And when they do a poor job, customers complain and networks crash. They and vendors have invested heavily in technology that manages networks.

    So why not for traffic? What if Virginia were to fund research in this area and license the technology? We are spending money trying to use energy more efficiently. Global Warming believer and skeptics alike would agree that energy efficiency is of value. Why not traffic efficiency? Sounds like a green economy plan to me. How much money could be generated by our academic institutions? By new companies?

    The stumble bums at the Fairfax County and State Chambers of Commerce should stop kissing the butts of the real estate developers long enough to think about real progress.



  14. I could not agree more with TMT.

    the roads need to be maintained and operated as the network that they are and we all know that one signal out of phase with other signals can and does wreak havoc.

    the signals need to adapt to changing traffic conditions and they need to "talk" to each other – as they do with the segments that have been synchronized.

    But you have to understand, the culture at VDOT is a road-building culture.. all about engineering and construction materials and techniques and treating roads as networks that need computerization is not a discipline that is a valued part of that culture.

    It's much more satisfying and rewarding to design and build a road than to wrestle with signalization software and the like.

    Access Management is a long-practiced discipline in other states but not really embraced by VDOT until recent years and even then controlling access by closing off some accesses and mandating others where there are few – is one of those areas where VDOT and the localities have different goals.

    And again, if you make the locality responsible for access and preserving and protecting the infrastructure and the financial consequences of not doing so, you get their attention much more than if they think it's a VDOT problem.

    I know in our area, now that we've have to pay for road upgrades ourselves, that we're focused much more on what kind of development will have one kinds of impacts and who will be responsible for mitigation.

    I'm not sure how Tysons managed to get toll road money to bankroll Metro but it's pretty clear that had that money not been there, that the proposed development would have been even more problematical.

  15. Anonymous Avatar

    If you sell the ABC stores you are not gaining revenue. Infact you are selling revenue and recovring capital that was previously expended in locating and setting up the stores.

    You will still collect taxes on the liquor sold, but you will lose whatever profit the stores made in addition to the taxes on liquor.

    You also lose a certain measure of control: you will collect more liquor taxes because more liquor will be sold. To the extent tht pivate stres sell more liquor and make more profits, the state will collect more money.

    By collecting tax money on liquor store profits the state expends little effort for the money it gets: its ROI may be higher in this respect.

    But the state also has to police liquor related violence and mayhem, as well as the liquor stores themslves, so the gians in liquor and income taxes won't come for free. State residents will probably be able to buy liquor at lower prices.

    TC = PC + EC + GC

    Here, Production Costs are the costs of operating the stores and getting liquor to the consumers, This includes the "benefits" of having alcohol available, and the probable benfits of lower price and more locations.

    External costs are increased societl problems due to liquor abuse.

    Government costs go down by not having to operate the liquor stoes but go up by the amount it costs to regulate and police them.


    My personal opinion is that liquor stores are a legacy of prohibition and that government has no business doing something private business can reasonably do on its own. In this regard, liquor stores are a hugely different kind of enterpise than roadways, which private enterprise cannot reasonably do on its own.

  16. I had the "Liquor Store" discussion with a friend today who is a "consultant" in Richmond.

    Anyway, what basically came out of it was that nobody down there (Richmond) really has any clue as to how to go about privatizing the stores.

    Be prepared for a few "studies" on the subject this coming session…..that's about it for now.

    For one thing, Virginia has a three-tiered system of alcohol distribution as far as beer/wine goes.

    By law, manufactures of beer/wine must ship their product to licensed distributors who then sell it to stores who then sell it to the public. I think wineries can sell a certain amount directly but it's not much.

    The alcohol distributors are the ones who really have a monopoly on the system as far as beer/wine goes….now your going to throw liquor in the mix and one question I have is, who gets to distribute it and how will that be determined?

    There are just a ton of unanswered questions in regards to this idea.

  17. piece of cake. It's called RFP.

  18. Anonymous Avatar

    Might do better on E-Bay.


  19. I agree with whoever made the comment that the liquor stores ought to be privatized – also

    and also agree that what happens to the liquor stores has little to do – long term – with the budget – the "operational" budget that needs money coming in all the time – not one time sales of assets.

    See that's the part of McDonnell's rhetoric that sets off some warning bells to me.

    so he says: Fix Transportation by:

    1. – selling liquor stores
    2. – tolling I-95 (not allowed currently).

    3. – no increased taxes

    4. – do yet another review of VDOT to presumably find significant new money from existing bureaucracy. (why is it that EVERY Republican Gov feels the need to do a review of VDOT? Is it genetic? Do they think the next review is going to be the one that "works" and frees up billions of new money?)


    4. – hire a guy who has been characterized as developer-friendly and presided over 300 million in bonds for one county to (I presume) replicate that same experience/expertise at the state level.

    At least give the Dems credit.

    They look at this deal and cut directly to the chase.

    If you want significant new money, it's ain't coming from a turnip.

    I like that common-sense approach to telling the truth as opposed to all the twisting and turning the "no mo tax" folks end up gyrating .. ANYTHING to keep from admitting that some things just need more money…

    but I'll hold back from the "told you so's" until I'm pretty sure that McDonnell ain't going to pull any fiscal rabbits out of his hat.

    I'll allow that it is POSSIBLE that the man COULD be a budget genius .. and will show everyone that the "right kind" of conservatism does indeed exist.. though rare…

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