During the 2017 legislative session, more than 2,900 bills and resolutions were considered. There is no easy formula to determine which bills will progress far enough to become substantial policy initiatives or which will become controversial matters. And, while there were several missed opportunities this session, the efforts made toward assessing Virginia’s fiscally distressed localities will have long-term positive implications for years to come.
In 2016, Petersburg’s financial situation made headlines throughout the commonwealth and led to serious conversations about the financial health of Virginia’s cities and counties. What we saw in Petersburg, in addition to a declining economy nationwide, was longstanding financial mismanagement, negligence, and declining cash balances dating back to 2009.
And, what we saw in localities like Emporia, Martinsville, Lynchburg, Buena Vista — all classified as having significant fiscal stress — is that these historic cities were displaying similar indicators, and they were largely going unaddressed.
In Virginia, a report from the Commission on Local Government revealed that 53 percent of Virginia’s counties and cities are experiencing above average or high fiscal stress. Moreover, a number of cities and counties across the nation have suffered from fiscal distress. According to a Pew Charitable Trusts study, fewer than half the states have laws allowing state officials to intervene in municipal finances, and generally local governments frown upon interference from state officials.
As a result, North Carolina and 21 other states have developed strong formal processes for monitoring and reviewing financial information. North Carolina has made great strides in identifying and addressing fiscal distress and is looked to as a leader in this area. Furthermore, 15 states have statutes that define local fiscal distress. And states like Florida, Tennessee, and Louisiana employ various means for oversight, including appointing a financial administrator to control fiscal operations or requiring distressed municipalities to produce corrective plans, reduce expenditures, issue funding bonds, or raise taxes.
We’ve responded in Virginia by creating a work group that has examined local fiscal distress and produced an action plan.
The components have been incorporated into the budget and include: improving how Virginia monitors fiscal activity and increasing the level of oversight by the auditor of public accounts; establishing a mechanism that is responsive to situations of local fiscal distress; and providing readily available resources should intervention become necessary.
As a start, this session the House passed a budget that allocates up to $500,000 to conduct intervention and remediation efforts in situations of local fiscal distress that have been previously documented by the Office of the Secretary of Finance prior to Jan. 1, 2017.
Furthermore, as a long-term approach, additional language establishing a Joint Subcommittee on Local Government Fiscal Stress is also included. The subcommittee will review: savings opportunities for increased regional cooperation and consolidation of services; local responsibilities for service delivery of state-mandated or high-priority programs; causes of fiscal stress; potential financial incentives and other governmental reforms for regional cooperation; and the different taxing authorities of cities and counties.
An integral part of the approach we take towards addressing fiscal distress must also include conversations about electing capable local leadership and providing training in areas most critical to effective governance and financial management. Where there are gaps in knowledge and understanding, elected officials must be willing to educate themselves in every area necessary for good governance.
This session, we saw legislation introduced relating to the removal of public officers and bills that would strengthen citizen’s ability to hold their elected officials accountable — and rightly so, given the number of localities facing leadership challenges.
Serving in an elected capacity is a laborious task, but it is also a privilege. Part of accepting the oath of office is the commitment to equip ourselves with the knowledge, skills, and abilities for the decisions we are charged with making. Leaders that negligently make decisions that place our localities in financial turmoil should not proceed without accountability.
Effective training for local leadership and governing boards that provides comprehensive education in budget analysis and financial management must become the new norm. This training should promote best practices for oversight of public safety, public utilities, public debt, and public schools. The short-term and long-term impact of revenue streams and expenditures must be understood. And thorough information on all of these matters should be provided with sufficient time for review and deliberation.
Local governments are a municipality’s first line of defense in promoting stable communities. Strong leadership is key to achieving this goal. Virginia law rightfully limits the extent to which state agencies and officials can intervene in local matters.
The work group’s recommendations for monitoring and addressing situations of local fiscal distress are not meant to condone mismanagement in municipal government. Rather, these recommendations are made to ensure that our commonwealth remains strong and citizens can live in viable communities that provide opportunities for growth and success.
Lashrecse Aird, a Democrat, represents the 63rd District in the Virginia House of Delegates. Contact her at DelLAird@house.virginia.gov.