Which states manage taxpayer money the best? Which states are the most irresponsible with their fiscal health? The Mercatus Center at George Washington University has developed a chart showing how all 50 states rank in overall fiscal solvency.
The financial health of each state can be analyzed through the states’ own audited financial reports. By looking at states’ basic financial statistics on revenues, expenditures, cash, assets, liabilities, and debt, states may be ranked according to how easily they will be able to cover short-term and long-term bills, including pensions.
This ranking of the 50 states is based on their fiscal solvency in five separate categories:
Cash solvency. Does a state have enough cash on hand to cover its short-term bills?
Budget solvency. Can a state cover its fiscal year spending with current revenues? Or does it have a budget shortfall?
Long-run solvency. Can a state meet its long-term spending commitments? Will there be enough money to cushion it from economic shocks or other long-term fiscal risks?
Service-level solvency. How much fiscal “slack” does a state have to increase spending should citizens demand more services?
Trust fund solvency. How much debt does a state have? How large are its unfunded pension and health care liabilities?
How financially healthy is your state? Most states are nearly back to normal since the Great Recession, although there are troubling signs that many states are still ignoring the risks on their books, mainly in underfunded pensions and health care benefits. Even states that appear to be fiscally robust—perhaps owing to large amounts of cash on hand or revenue streams from natural resources—must take stock of their long-term fiscal health before making future public policy decisions.
The top five states are all run by Republicans: Alaska, North Dakota, South Dakota, Nebraska, and Florida. The bottom 5 are all run by Democrats: Illinois, New Jersey, Massachusetts, Connecticut, and New York (New Jersey, Illinois, and Massachusetts have GOP governors and a Democratic legislature).
The next best 5 states are Wyoming, Ohio, Tennessee, Oklahoma and Montana. The next 5 worst states are Kentucky, California, West Virginia, Maine and Pennsylvania.
There is ample data to draw the singular conclusion that Republican-run states are far more responsible with tax dollars than Democratic-run states.
But we knew that already, didn’t we?