We are used to looking at the world through a geographic lens. For instance, we use maps to show the land area of each locality in Virginia, its geographic features, and distances between different locations.
While maps showing the geography of the commonwealth certainly have their benefits, when better trying to understand the state’s economic geography, it is useful to prepare maps and graphs that remove the focus on land area. This allows us to focus more on the economic size of each county, city, and region rather than on the geographic size.
Below, a number of graphs represent Virginia not as a geographic commonwealth, but rather, as an economic commonwealth based on square ‘treemap’ diagrams that compare key demographic, economic, and fiscal aspects of the commonwealth. For convenience, localities have been grouped into four economic regions (based on GO regions): Coastal Virginia (Region 5), Northern Virginia (Region 7), the Richmond region (Region 4), and the rest of Virginia.
When this post is viewed on a desktop, the graphs are presented as pairs to allow for easy comparison: land area and population; population and local area GDP, and so on. For those who prefer the numbers, a summary of the regional totals is provided in a table at the bottom of this blog. Full-size individual graphs are available in the accompanying post in the graphs and maps section.
‘Trees don’t vote’: Land area versus population
A first analysis considers the contras between the distribution of land area in the commonwealth versus the distribution of its population. Politicians running for state-wide office are (or should be) acutely aware of this metric.
For instance, whereas Coastal Virginia and Northern Virginia together only reflect 11 percent of the state’s land area, they combine to represent 49.5 percent of the state’s population. When the Richmond region is added in, 20.1 percent of Virginia’s land area contains 64.5 percent of its population.
Not all Virginia regions and localities are equally economically productive: Population versus Local Area GDP
The next pair of graphs compares the population size of each locality and region in the Commonwealth alongside its local area gross domestic product (GDP), prepared by the Bureau of Economic Analysis. Local area GDP estimates the value of all final goods and services produced within a specific county or metropolitan area, similar to national and state-level GDP figures.
When considering economic productivity, it is notable that over a quarter (26%) of Virginia’s economic productivity takes place in one single county—Fairfax County (aka The State of Fairfax). Part of this—but certainly not all of it—can be attributed to the size of the county’s population, as Fairfax County is the most populous locality in the state, representing 13% of the state’s population.
Overall, the nine counties and cities in Northern Virginia contribute 46.3 percent to the state’s economy, while representing 29.4 percent of the state’s population. Northern Virginia and Coastal Virginia both ‘punch above their weight’ in terms of economic activity, jointly reflecting nearly two-thirds of the state’s economy (64.7 percent).
As an aside: nominal local area GDP versus real local area GDP
Nominal local area GDP versus real local area GDP
As an aside, in economic analyses, it is good practice to take into account the considerable variation in the cost-of-living or prices within the commonwealth. We do this here by comparing nominal (‘regular’) local area GDP versus ‘real’ (cost-adjusted) local area GDP.
This adjustment reflects the ‘real’ value of economic productivity to its residents. While the adjustment reduces the relative economic productivity of Northern and Coastal Virginia, these regions continue to ‘punch above their weight’ in terms of economic production, even after adjusting to the high cost-of-living.
Local area GDP versus taxation (Virginia individual income tax)
With the uneven distribution of wealth and income across the state, it shouldn’t be a surprise that Northern Virginia contributes considerably to state tax revenues. Whereas the region reflects 29.4 percent of the population and 46.3 percent of the state’s GDP, the region contributes 47.4 percent of Virginia’s Individual Income Tax revenues.
Fairfax County by itself contributes nearly 4 billion dollars (23.4 percent) to the state’s income tax revenues.
While the nearly proportional relationship between local area GDP and state income tax revenues is logical and understandable, it should be noted that this relationship actually hides considerable progressivity in taxation, as residents in the more productive parts of the state face a much higher cost-of-living. For instance, while NoVA contributes 47.4 percent of Virginia’s Individual Income Tax revenues, its share of real local GDP is only 37.5 percent. As such, the state income tax is actually more regionally redistributive than shown below.
Contribution to the Commonwealth treasury versus intergovernmental revenue from the Commonwealth treasury
A stark contrast is revealed by comparing the contribution of each locality and region to the state treasury to the distribution of intergovernmental revenue from the Commonwealth.
As a region, Northern Virginia contributes 8. 1billion in state individual income taxes to the state budget, but receives back only 3.6 billion dollars. (This comparison does not even take into account any other sources of state revenue). By contrast, the Richmond Region contributes 2.4 billion dollars, but gets back 2.2 billion. Both Coastal Virginia and the Rest of Virginia get back more in intergovernmental revenues than they contribute in individual income tax revenues, even without considering the other state revenue sources.
Nominal intergovernmental revenue versus real intergovernmental revenue
Any concern about the gap between the balance of payments between state revenues and the distribution of intergovernmental transfers is further amplified when intergovernmental revenues are considered in real (cost-adjusted) terms. For instance, while Fairfax County contributes 23.4 percent of Virginia individual income taxes, it only receives 8.7 percent or cost-adjusted (real) intergovernmental revenues.
A final aside: real IGR versus poverty
A final aside: real IGR versus poverty
Many observers rationalize that the regional balance of payment in Virginia is ‘fair’ because Northern Fairfax, Richmond, and the other urban centers are ‘rich’ while the rest of Virginia is ‘poor’. This generalization is not a reflection of reality, as shown below.
Despite their higher income levels (and not even accounting for the higher cost-of-living in the more urbanized parts of the state), the majority (57 percent) of Virginia’s poor residents reside in Coastal Virginia, Northern Virginia, or the Richmond region (23.4, 18.2, and 15.4 percent, respectively). Out of total of 867,054 estimated poor Virginians, 69,309 poor residents live in Fairfax County alone. Whereas this may be a lower share of the county’s population than other counties, Fairfax County nonetheless has to provide public services to the largest number of low-income households in the Commonwealth.
If the sole policy objective of intergovernmental fiscal transfers was to help localities provide social programs for their lowest-income households, then the comparison between real IGR versus poverty suggests that the distribution of intergovernmental resources is more or less in the right ballpark.
However, if state aid is also intended to fund local public services that are distributed more evenly across the commonwealth in proportion to population—such as helping to alleviate the costs of special education programs—or intended to fund local public services that are distributed in proportion to economic activity—for instance, to fund investments that keep the state’s economic engine going—then the distribution of real intergovernmental revenues seems to be quite skewed.
The pictures in numbers
| Coastal Virginia | Northern Virginia Region | Richmond Region | Rest of Virginia | Total Virginia | of which, Fairfax County | |
|---|---|---|---|---|---|---|
| Original units | ||||||
| Land area (Sq. mi.) | 3,045 | 1,304 | 4,001 | 31,132 | 39,482 | 391 |
| Population | 1,752,890 | 2,566,483 | 1,339,060 | 3,070,599 | 8,729,032 | 1,139,398 |
| Local area GDP (mn) | 103,694.6 | 261,152.7 | 69,097.0 | 130,567.8 | 564,512.1 | 146,733.8 |
| VA Ind. Income Tax (mn) | 2,384.8 | 8,062.8 | 2,385.1 | 4,185.4 | 17,018.1 | 3,976.7 |
| IGR fr. Commonw. (mn) | 3,079.5 | 3,586.6 | 2,193.4 | 4,485.8 | 13,345.3 | 1,513.3 |
| Real IGR fr. VA (mn) | 2,936.7 | 2,496.7 | 1,983.2 | 4,617.7 | 12,034.3 | 1,042.7 |
| Real LA GDP (mn) | 99,841.8 | 175,307.5 | 61,806.7 | 130,399.4 | 467,355.3 | 101,099.5 |
| Number of poor | 203,101 | 157,677 | 133,332 | 372,944 | 867,054 | 69,309 |
| Percent of total | ||||||
| Land area | 7.7 | 3.3 | 10.1 | 78.9 | 100.0 | 1.0 |
| Population | 20.1 | 29.4 | 15.3 | 35.2 | 100.0 | 13.1 |
| Local area GDP | 18.4 | 46.3 | 12.2 | 23.1 | 100.0 | 26.0 |
| Virginia Ind. Income Tax | 14.0 | 47.4 | 14.0 | 24.6 | 100.0 | 23.4 |
| IGR fr. Commonwealth | 23.1 | 26.9 | 16.4 | 33.6 | 100.0 | 11.3 |
| Real IGR fr. Commonw. | 24.4 | 20.7 | 16.5 | 38.4 | 100.0 | 8.7 |
| Real Local area GDP | 21.4 | 37.5 | 13.2 | 27.9 | 100.0 | 21.6 |
| Number of poor | 23.4 | 18.2 | 15.4 | 43.0 | 100.0 | 8.0 |
