State Budget Practice Report Cards and Budget Resource Guide
Virginia scored straight As in budget forecasting and reserve funds for fiscal 2016 through 2018. While the marks were fitting for a state with triple-A general obligation credit ratings, its performance in the three other categories showed how even a state with impeccable credit has room to improve its budgetary process.
Take legacy costs, in which Virginia averaged a D. It fell short of meeting actuarial recommendations for funding other postemployment benefits, chiefly health care, for all three years studied. The state also failed to match actuarial recommendations for funding pensions in fiscal 2016 and 2017. It succeeded in making the recommended contribution in 2018, however, which lifted its mark that year to a C.
Virginia averaged a C in transparency. Like forty-five other states, it failed to disclose deferred infrastructure replacement costs in 2018. It also neglected to produce regular tax expenditure reports. A measure requiring the Department of Taxation to report the fiscal, economic, and policy impact of sales and use tax exemptions was repealed in 2012. Although the legislature’s Joint Subcommittee to Evaluate Tax Preferences publishes updates on the topic on its website, disclosures are neither consistent nor complete.
Virginia earned an A average in reserve funds by having policies in place that govern fund disbursement and replenishment and that link rainy day fund deposits to revenue volatility.
The state’s top grade in forecasting stemmed from its consensus revenue estimates. They are prepared by the Joint Advisory Board of Economists and Governor’s Advisory Council on Revenue Estimates, both of which are composed of gubernatorial and legislative members and outside experts. Economic outlooks from two consulting firms are adapted to reflect the state’s economy using revenue data from the Virginia Department of Taxation, including the historical trend of general fund collections and applicable tax law changes. Meanwhile, the Department of Planning and Budget produces six-year revenue and expenditure forecasts.
To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.
The report cards found here contain grades of the state's budgetary practices during the fiscal years of 2016 through 2018. Each state received marks in five critical categories, based on their adherence to best practices in several key budgeting indicators. The five categories covered methods used to achieve budgetary balance as well as how budgets and other financial information are disclosed to the public.
States received grades of A to D-minus (there are no “failed states”) for their procedures in estimating revenues and expenditures; their use of one-time actions to balance budgets; how they oversee and use rainy day funds and other fiscal reserves; the adequacy of their funding of public worker retirement and other postemployment benefits; and the quality of transparency of budget and related financial information. The grades are based on research conducted by public finance and budgeting professors and students at eight US schools of public administration or policy. The universities’ research efforts were augmented by Volcker Alliance staff, data consultants at Municipal Market Analytics, and special project consultants Katherine Barrett and Richard Greene.
State Budget Sources
State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses is a resource published by the Volcker Alliance designed to help public officials, policy advocates, journalists, academics, and concerned citizens fully understand the critical fiscal decisions that governors and legislators must make. The guide includes the links below to budgets for this state as well as legislative analyses of budget bills and treasurers’ or comptrollers’ monthly state cash-flow statements; capital spending plans; reports on public-worker pension funding and returns; and reports by local and national fiscal research organizations, bond rating firms, and associations of state fiscal and finance officials.