July 11, 2017

#18 | Ranking the States by Fiscal Condition: Virginia

Summary

On the basis of its fiscal solvency in five separate categories, Virginia is ranked 18th among the US states for its fiscal health. On a short-run basis, Virginia has between 1.68 and 2.46 times the cash needed to cover short-term obligations. Revenues exceed expenses by 3 percent, and net position improved by $140 per capita in FY 2015. Virginia’s fiscal performance is stronger on a long-run basis. Virginia has a net asset ratio of −0.06. Long-term liabilities are 34 percent of total assets, or $1,752 per capita. Total primary government debt is low at $7.14 billion, or 1.6 percent of state personal income. Unfunded pension obligations, on a guaranteed-to-be-paid basis, are $101.56 billion, or 23 percent of state personal income. OPEB is 1 percent of state personal income.

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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 27th.)
  • 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 31st.)
  • 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 16th.)
  • 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 4th.)
  • Trust fund solvency measures how much debt a state has. How large are unfunded pension liabilities and OPEB liabilities compared to the state personal income? (Virginia ranks 11th.)

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

To read all our work on Virginia, go to mercatus.org/states/virginia.