Analyst: Fiscal outlook for localities not good

Staunton City Council got a bit of a fiscal reality check on Thursday from James Reginbal from the Richmond consulting firm Fiscal Analytics.

“Nobody in Virginia has really felt the effects of this recession yet. Localities are behind the state because the state has been able to shield localities from the worst effects so far,” Regimbal told City Council members at their staff briefing.

Which is to say, Watch out for what’s coming, because it’s going to be a doozy. State lawmakers and Gov. Tim Kaine have been able to limit the pain to localities by using $1.5 billion in federal stimulus money and another $800 million in rainy-day funds and one-time budget actions to keep the state budget in balance without having to cut into state aid to localities.

“That’s making it feel not as bad as it is,” Regimbal said, but the pain is a-comin’, and soon.
“We’re going to need the recovery to happen soon to meet revenue projections for 2010,” Regimbal said, adding later that 2010 is likely to be a tough year for local governments even if the economy moves into recovery mode sooner rather than later.

The reason: project growth in Medicaid costs is likely to consume all new available revenues in 2010.

The logical answer to that issue would be to suggest cuts in Medicaid, but Regimbal said Virginia has little room to maneuver. The Commonwealth is already 48th in the nation in per-capita Medicaid spending.

“We’re among the stingiest states in terms of Medicaid enrollment,” Regimbal said.

  

– Story by Chris Graham

 



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