How Does Virginia Compare to Other States?
Virginia ranks 21st among US states for its fiscal health, based on its fiscal solvency in five separate categories.
Virginia’s fiscal performance varied across the categories. On the one hand, the state had 1.47 to 2.11 times the amount of cash needed to cover its short-term liabilities. Virginia’s FY 2013 revenues exceeded its expenses by 4 percent, producing a small surplus. On the other hand, long-term liabilities accounted for 30 percent of the state’s total assets, and assets matched state debts, leaving little cushion. At $83 billion, Virginia’s unfunded pension obligation was four times larger than official state estimates reported. Unfunded other postemployment benefits (OPEB) liabilities added almost $4 billion more.
See “Ranking the States by Fiscal Condition” for a complete explanation of the methodology used to calculate Virginia’s fiscal health rankings.
1. Virginia ranks 30th in terms of cash solvency.
Cash solvency measures whether a state has enough cash to cover its short-term bills, which include accounts payable, vouchers, warrants, and short-term debt. In FY 2013 Virginia’s cash ratios indicate the state had between 1.47 and 2.11 times the cash needed to cover short-term spending, lower than the national average.
2. Virginia ranks 29th in terms of budget solvency.
Budget solvency measures whether a state can cover its fiscal year spending out of current revenues. Did it run a shortfall during the year? Virginia’s revenues exceeded its expenses by 4 percent in FY 2013, and the state realized a surplus of $167 per capita.
Surplus (deficit) per capita
3. Virginia ranks 27th in terms of long-run solvency.
Long-run solvency measures whether a state has a hedge against large long-term liabilities. Are there enough assets available to cushion the state from potential shocks or long-term fiscal risks? On a long-run basis, Virginia’s assets matched its debts, leaving little cushion. (The net asset ratio measures the total of restricted and unrestricted assets, or net assets, as a portion of total assets. Net assets are a subset of total assets, which also include capital and government buildings.) Virginia’s long-term liabilities accounted for 30 percent of total assets, with a liability per capita of $1,484, about half the national average.
Net asset ratio
Long-term liability ratio
Long-term liability per capita
4. Virginia ranks 5th in terms of service-level solvency.
Service-level solvency measures how high taxes, revenues, and spending are when compared to state personal income. Do states have enough “fiscal slack”? If spending commitments demand more revenues, are states in a good position to increase taxes without harming the economy? Is spending high or low relative to the tax base? In Virginia, total taxes represented 5 percent of state personal income. Including other state revenues increased this to 9 percent of state personal income, which is lower than the national average, meaning Virginia spent less relative to state personal income than the average state.
Tax to income ratio
Revenues to income ratio
Expenses to income ratio
5. Virginia ranks 15th in terms of trust fund solvency.
Trust fund solvency measures how much debt a state has. How large are unfunded pension liabilities, other postemployment benefits (OPEB) liabilities, and state debt compared to the state personal income? Calculated on a guaranteed-to-be-paid basis, Virginia’s unfunded pension liability was 21 percent of total state personal income. (Pension benefits are recalculated based on a discount rate of 3.38 percent to account for the government’s guarantee to pay employees earned benefits.) OPEB and total debt accounted respectively for 1 percent and 2 percent of state personal income in Virginia.
Pension to income ratio
OPEB to income ratio
Debt to income ratio
State debt is calculated from each state’s Comprehensive Annual Financial Report. Virginia’s total primary government debt amounted to nearly $7 billion in FY 2013, or 1.7 percent of state personal income: $854 on a per capita basis.
General obligation bonds
Total primary government debt
State personal income
Ratio of debt to state personal income
Total primary debt per capita
Pension liability is calculated from each state’s pension actuarial reports. Virginia’s unfunded pension liability was four times the state’s estimates, at $83 billion.
Unfunded pension liability
Market value of unfunded liability (risk-adjusted discount rate)
Market value of funded liability ratio
OPEB liability is calculated from each state’s Comprehensive Annual Financial Report. Virginia’s OPEB liability was more strongly funded than average, at 29 percent. Unfunded OPEB liabilities amounted to almost $4 billion for FY 2013, which was approximately 1 percent of state personal income.
Total unfunded OPEB liability