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Economist Mom

In Virginia, you (only) get what you pay for

Virginia, like most states, has a balanced budget requirement. Luckily, the federal government does not.

By Guest blogger / March 16, 2010

University of Virginia students Carrie Jaeckle (l.), Bethany Turner, and Bethany Martin, (r.), have a snow ball fight on the Lawn at the University of Virgina in Charlottesville, Va., in this Feb. 5 photo. Like many states, Virginia is required to balance its budget each year. To close budget gaps, the state recently approved $82 million in cuts, which translations to cuts in services, like education.

Megan Lovett//The Daily Progress/AP Photo/File

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It’s the same situation in all states, actually. Virtually all state governments have some sort of “balanced budget requirement.” (See Table 11 on pages 40-41 in this report of the National Association of State Budget Officers (NASBO).) The constraints take on a variety of degrees of stringency, but empirical evidence suggests they do bind (i.e., matter). Even in Vermont, the only state that doesn’t have any sort of balanced budget requirement, the NASBO report indicates that “in practice, a deficit has not been carried over.”

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So in Virginia (where I live and work), we’re now offered a little insight into what balancing the budget entirely on the spending side looks like, with this report in today’s Washington Post (emphasis added):

RICHMOND — The Virginia General Assembly adjourned its annual legislative session Sunday evening after adopting a two-year, $82 billion budget that cuts millions from education, health care and public safety — curtailing state spending more aggressively than any in generations while fulfilling the new Republican governor’s promise not to raise taxes.

The trade-off for holding firm against a tax increase to plug a $4 billion hole was a spending plan that cuts deeply into virtually every area of state responsibility.

“We tried to keep our word,” said House Majority Leader H. Morgan Griffith (R-Salem). “We knew times were tough, but the state has to live within its means, just as families have to live within theirs.”

Funding for schools will drop $646 million over the next two years; the state will also cut more than $1 billion from health programs. Class sizes will rise. A prison will close, judges who die or retire won’t be replaced and funding for local sheriff’s offices will drop 6 percent.

Only 250 more mentally disabled adults will receive money to get community-based services, in a state where the waiting list for such services numbers 6,000 and is growing. Employees will take a furlough day this year, the state will borrow $620 million in cash from its retirement plan for employees and future employees will be asked to retire later and contribute more to their pensions.