Florida comes out on top, with its government finances in the best shape compared to other states, in a new ranking of state fiscal health that university researchers published this week.
At the bottom of the list, with the worst-off state fiscal situation: New Jersey.
The Mercatus Center at George Mason University released the 2017 edition of its “Ranking the States by Fiscal Condition” report on Tuesday. The study, now in its fourth year, uses 13 metrics to analyze state finances based on five 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 if citizens demand more services?
- Trust fund solvency: How large are each state’s unfunded pension and healthcare liabilities?
On the basis of its fiscal solvency in the five categories listed above, Maryland is ranked 46th among the US states for its fiscal health.
According to The Mercatus Center,
On a short-run basis, Maryland holds between 55 percent and 148 percent of the cash needed to cover short-term obligations. Revenues exceed expenses by 1 percent, and net position improved by $88 per capita in FY 2015. On a long-run basis, Maryland’s net asset ratio is −0.5, pointing to the use of debt or unfunded obligations. Long-term liabilities are 94 percent of total assets or $6,554 per capita, which is higher than the average in the states. Total primary government debt is $17.55 billion, or 5.2 percent of state personal income. On a guaranteed-to-be-paid basis, unfunded pension obligations are $88.41 billion, or 26 percent of personal income. OPEB is 3 percent of personal income, which is better than the average in the states.
Information used to come up with the rankings was pulled from 2015 state comprehensive annual financial reports.
The study was authored by Eileen Norcross, program director for the State and Local Policy Project at the Mercatus Center, and Olivia Gonzalez, a research associate for the State and Local Policy Project and a Ph.D. student at George Mason University.
A full copy of the report and related spreadsheet data can be found here.