Sunday, December 01, 2013

Bleak Friday - And Year - For Many Virginians


One hears Republicans at the state and federal level blathering disingenuously about wanting to create jobs and promote economic growth, yet in their quest to never raise taxes - and preferable give tax breaks to the wealthy - they enact budgets that ultimately have the exact opposite of the goals they pretend to support.  And as The Commonwealth Institute reports, past decisions and GOP backed budgets when fully analyzed present a less than rosy picture for Virginia.  Here are some excerpts:

Official state estimates predict the amount of money it takes in to pay for education, health care and other services will increase moderately over the next few years as personal income ticks up.

But a closer look at the numbers, adjusting revenue projections to account for one-time revenue bumps and reduced federal spending, changes that picture and puts Virginia back into shortfall territory, without enough revenue to meet the routine needs of Virginians.

Official state revenue forecasts may have Virginia with $700 million more than it needs to meet its technical budget obligations for Fiscal Year 2014-2016. Or, the sluggish economy and past decisions made to balance the budget may have the state facing a cumulative shortfall of over $300 million by the end of Fiscal Year 2016.

Key factors influencing the 2014-2016 budget:
  • Recent revenue windfall masks problems.
    • In 2013, Virginia got a one-time, $290 million windfall from non-withholding tax payments – almost three-times more than expected.
    • That windfall helped balance the budget, but masked revenue shortfalls in other areas, including sales, corporate and individual income tax withholdings.
    • Without the bump in non-withholding, Virginia would have missed its FY 2013 revenue forecast
    • Backing out the one-time revenue boost from the formula used to calculate future revenue growth has Virginia facing a shortfall of about $300 million by the end of FY 2016.
  • Sequestration, sluggish economy starting to hit state.
    • Recent employment gains in the state have been below expectations and well below typical recovery patterns.
    • Virginia’s individual income tax withholdings and sales tax revenue slowed in the spring and summer of 2013.
    • The federal government accounts for 1 out of every 12 jobs in Virginia. Nationally, that figure is 1 out of every 27 jobs.
    • With two wars winding down and federal lawmakers aiming to reduce the national debt and deficit, it’s likely that military spending will decrease regardless of the details of sequestration.
  • Years of cuts have starved vital services while costs remain.
    • State spending in key areas is now below pre-recession levels, even before considering inflation cost increases or cost increases driven by population growth.
    • Support for public education is down by $479 million, or 8.5 percent compared to pre-recession levels. Yet enrollment is up 3.6 percent.
    • General fund support for the state’s colleges and universities is down $140 million – 8.4 percent – but enrollment is up 24 percent.
  • Bills to be paid.  During the recession, the state nearly depleted its rainy day fund. Replenishing that fund at its new increased level will take years and is also a legal obligation that reduces budget flexibility and the amount available to invest in key priorities.
 Other disturbing findings have been released in respect to Virginia's wage levels that are troubling:

In 2012, hourly wages for workers at every wage level were below their historical peaks. In other words, when you adjust for inflation, low, middle, and high earners alike earned less per hour in 2012 than they had at some point in the past decade or so.
What varies, however, is how far wages have fallen and for how long.
Wages for all workers  in Virginia peaked somewhere between 2001 and 2010. For lower earners, those peaks occurred longer ago than for higher earners, whose wages peaked much more recently. That means lower wage workers were taking hits not just during the recession, but well before it began, while high wage workers saw their wages rise, even during the recession.
- See more at: http://thehalfsheet.org/post/68170755977/in-the-dark#sthash.yFu71OWG.dpuf


In 2012, hourly wages for workers at every wage level were below their historical peaks. In other words, when you adjust for inflation, low, middle, and high earners alike earned less per hour in 2012 than they had at some point in the past decade or so.

What varies, however, is how far wages have fallen and for how long. Wages for all workers  in Virginia peaked somewhere between 2001 and 2010. For lower earners, those peaks occurred longer ago than for higher earners, whose wages peaked much more recently. That means lower wage workers were taking hits not just during the recession, but well before it began, while high wage workers saw their wages rise, even during the recession.

As a result, lower-wage workers are now even worse off relative to their higher-wage counterparts. For example, the bottom 10 percent of earners – who make up to $8.18 an hour – had wages in 2012 that were more than 10 percent below their 2004 peak. But the top 10 percent of earners – who make more than $47.97 an hour – were only 2 percent down from their peak, which they just hit in 2010. 

It goes without saying that the GOP nationally and in Virginia opposes increasing the minimum wage even though  most of the increase in wages would be immediately re-injected into the economy.  As for Medicaid Expansion, which the Virginia GOP likewise opposes, the Commonwealth Instutite found that it would pay for itself, expand the number of Virginian's with health care access, and create jobs:

Virginia has many options to ensure that expanding Medicaid can pay for itself and provide coverage to nearly 400,000 uninsured Virginians. That’s because Virginia currently funds a wide range of services for the uninsured with state general fund dollars. To the extent that Medicaid would begin paying for some of those services with federal dollars, it would both reduce state costs and provide funding for unmet health needs in Virginia.


While expansion is forecast to cost the state $1.60 billion from 2014 to 2022 – with most of that cost coming in the later years – the $1.64 billion in savings from expansion would offset all of the costs and ease state budget pressures.

Over the next nine years (2014-2022), savings would come from six key sources:
  • $637 million from reducing indigent care funding by 50 percent.
  • $292 million from insuring patients treated through Community Service Boards for mental health and substance abuse issues.
  • $290 million from covering the inpatient hospital care for state prisoners.
  • $173 million from slowing growth in premium increases for the state employee health insurance plan.
  • $142 million from capturing savings from other provisions of the Affordable Care Act.
  • $104 million from replacing general funds with federal funds used to support programs for low-income people who currently do not qualify for Medicaid.
 Given that its policies are wrong for most Virginians, how does the Virginia GOP manage to cling to power?  It plays on the racism, religious extremism and overall bigotry of the party base and induce the ignorant and short sighted to vote against their own long term best interest.  One has to wonder when the Hell these folks are going to open their eyes.

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