Choice Under Constraint: Enterprise-Fund Transfers and Divergent Fiscal Trajectories Among Virginia's Independent Cities
Among structurally similar Virginia independent cities, the evidence is consistent with the proposition that a sustained discretionary interfund transfer, alongside shared structural pressure,…
Among structurally similar Virginia independent cities, the evidence is consistent with the proposition that a sustained discretionary interfund transfer, alongside shared structural pressure, materially reduced one city's fiscal margin of safety. Radford's total net position fell 35 percent over FY2015-FY2024 while three peer cities grew theirs 40 to 67 percent. Radford moved municipal electric-utility margin into its general fund at 18.5 percent of operating revenue, against a zero-to-seven percent observed peer range, drawing a cumulative $52.04 million from FY2011 through FY2024; a closely matched comparison city running a broadly similar utility at a similar scale, but transferring nothing, stayed solvent. Audited proprietary-fund statements show Radford's electric-fund working capital falling from $9.9 million in FY2015 to negative $2.3 million in FY2024 as the transfers persisted. Using a nested comparative-case design built entirely from audited financial reports, the paper treats the transfer as a recurring budget mechanism and a material, temporally prior contributor to that deterioration, consistent with fiscal illusion. It offers a transfer-to-operating-revenue ratio as a candidate monitoring screen that aggregate distress measures can miss.