Virginia

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Summary

On the basis of its fiscal solvency in five separate categories, Virginia ranks 19th among the US states and Puerto Rico for its fiscal health. On a cash basis, Virginia has between 1.63 and 2.40 times the cash needed to cover short-term liabilities. Revenues exceed expenses by 3 percent, for a surplus of $151 per capita. Virginia’s net asset ratio of −0.005 indicates that the state has no assets remaining after meeting its debts. Total liabilities are 30 percent of total assets. Total debt is $6.86 billion. Unfunded pension liabilities are $87.66 billion, and other postemployment benefits (OPEB) are $5.19 billion. These three liabilities are equal to 24 percent of total state personal income.

Key Terms

  • 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. (Virginia ranks 28th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Virginia ranks 28th.)
  • Long-run solvency measures whether a state has a hedge against large long-term liabilities. Are enough assets available to cushion the state from potential shocks or long-term fiscal risks? (Virginia ranks 26th.)
  • 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? (Virginia ranks 5th.)
  • Trust fund solvency measures how much debt a state has. How large are unfunded pension liabilities, OPEB liabilities, and state debt compared to the state personal income? (Virginia ranks 14th.) 

For a complete explanation of the methodology used to calculate Virginia's fiscal health rankings, download the full paper and the dataset at mercatus.org/statefiscalrankings-2016-edition.