It’s a story that hasn’t gotten a lot of play in the Virginia press, and is certainly never mentioned in the Governor’s talking points about his budget-balancing skills, but buried inside this Richmond Times Dispatch piece on the state’s tepid economy is a fact you need to know:
Virginia may also have to borrow an additional $613 million from the federal government between 2011 and April, 2012 to pay benefits to unemployed Virginians.
Wait…borrow more money to pay unemployment claims?
…Virginia owes the federal government $347 million in loans for unemployment compensation…
That’s right folks, Virginia and 31 other states have been borrowing money directly from the federal government to pay unemployment claims because the state’s own claims fund ran out of money.
And here’s an even less-well known item: the state, by law, had to raise taxes on employers to help refill the empty coffers. Funny, I didn’t get the press release on that one from the state’s chief jobs creation officer.
Given all this borrowing and hiking of taxes, it’s little wonder that the Governor is asking state agencies to plan for additional cuts, just in case the economy (and overall tax receipts) continue to sputter. But unlike the budget cuts made during the last General Assembly session, the ones being asked for now are much wider in scope:
“Previous exercises have exempted as much as two-thirds of the general fund budget from consideration,” [McDonnell chief of staff Martin Kent] writes. “A full review of the budget priorities requires that the entire budget be subjected to this exercise.”
This is as prudent as it is long overdue. And ironically, a Republican takeover of Congress in November could very well make such sweeping cuts the rule for some time. Why? If a new GOP Congress carries out its promise to cut spending, Virginia – which ranks second in per capita federal spending – will be in for some rough budgetary times.
Which could also mean it may be a while before the state is able to discharge its debt to Uncle Sam for those unemployment claims.
