Last week the city of Detroit filed for bankruptcy, reportedly with an indebtedness of more than $18 billion. The city has a staggering pension liability as well. This has called into question the “blue model,” a label that has been applied to what are called “progressive” municipalities such as Chicago, Santa Fe and Oakland.
Chicago’s credit rating was lowered three notches at the same time that Detroit filed for bankruptcy. Could they be next?
In 1960, Detroit had a population of approximately 1.8 million, more than two and a half times its current population. It also had the highest per capita income in the nation. There are many who trace the decline of the city to the “blue model” and machine politics. As Washington Post columnist Rick Plumer observes: “Detroit has been a one-party city run by Democrats since 1962.”
West Virginia has been struggling under the “blue model” for even longer than Detroit. We’ve been under one-party rule since the 1930s. Over that time period, our state’s economic record is abysmal and the path we are on is as unsustainable as Detroit’s.
In 1934, West Virginia ranked 30th in the nation in per capita income; today we are 49th, just ahead of Mississippi. In 1950, our population was over 2 million; today it is 1.85 million. According to Forbes’ list of The Top 10 States People Are Fleeing in 2013, West Virginia ranked 3rd, behind New Jersey and Illinois. According to the CNBC survey, America’s Top States for Business 2013, West Virginia ranked 48th. We ranked last in the “business friendliness” category, the measure of the state’s legal and regulatory climate. During the 10-year census period ending 2010, West Virginia was the first U.S. state in history to record more deaths than births.
That is the abysmal part. Here is the unsustainable part. Like Detroit, West Virginia has a huge unfunded pension liability. In spite of what you hear, that problem has not been fixed. Then there’s the growth of our state’s bond debt, which according to an article by West Virginia Watchdog published in February of 2010, is growing at an alarming rate.
In 1991, the state Legislature created a new agency called the Division of Debt Management. The agency only reports on debt; it does not create comprehensive plans as required by the legislation that created it. You can’t make this stuff up. According to the article, from 1991 through the end of 2009 our bond debt increased by a staggering 158 percent. You can be sure that it has increased since then. Our local sewer bonds will add $100 million alone.
The growth of our state government is just as alarming. Back in the early 1990s our state budgets were running around $3.5 billion. Today they are running $11.5 billion. That’s a threefold increase. Adjusted for inflation, the budget has doubled in constant dollar terms. Yet, over that time frame the population of West Virginia has increased by less than 2 percent.
So, over a two-decade time span, the population of West Virginia has remained almost stagnant while government spending doubled in constant dollars and the state’s indebtedness increased by more than 150 percent! This is clearly unsustainable and begs the question: Why do we need a government that is twice the size it was 20 years ago to serve the same number of people? If we’re going to spend twice as much for something, shouldn’t the quality be better? That’s just not how it works under the “blue model.” The price goes up, the quality goes down.
Against this backdrop, the Governor’s Blue Ribbon Commission dog and pony show has been traveling throughout the state promoting a proposal to raise as much as $1.3 billion in additional revenue for highways. It arrived in Kearneysville on July 12th.
Let’s put this into perspective. The current state budget is around $11.5 billion. That is an expenditure of $6,200 for every man, woman and child in West Virginia — almost $25,000 for every family of four. And we can’t afford to maintain our roads? Where is all that money going? Are you getting your money’s worth, dear taxpayer?
The median household income in the state is around $38,000, so there aren’t many families paying $25,000 per year into the state’s coffers. It’s simple math, it doesn’t add up and it’s not sustainable.
An additional $1.3 billion would mean an additional $700 from every living soul in West Virginia, or $2,800 for a family of four. Can your family afford that?
The entrenched political machine in Charleston is constantly working on ways to expand the size and scope of state government at our expense, and to our detriment. If more money is needed for highways, it needs to come from existing sources.
Otherwise all roads lead to Detroit.
— Elliot Simon writes
from Harpers Ferry