State Fiscal Rankings: The Mercatus Center at George Mason University

For the fifth and final year, a new study from the Mercatus Center at George Mason University ranks the 50 states according to their financial condition. Each edition has provided a snapshot of each state’s fiscal health by providing information from audited state financial reports in an easily accessible format. In “Ranking the States by Fiscal Condition, 2018 Edition,” Eileen Norcross and Olivia Gonzalez calculate this year’s rankings from each state’s fiscal year 2016 reports and then apply trend analysis to reports for each year from 2006 until 2016.

The study measures how well states can meet short-term and long-term bills by examining their financial statements. Most states are in a stable condition, with the exception of the size of unfunded pension liabilities (a large portion of most state government obligations). Some states also have consistently low levels of cash, which indicate the potential for budget shortfalls during a recession.

A Multidimensional Approach to Fiscal Solvency

The study analyzes state finances according to five dimensions. These dimensions combine to produce an overall ranking of state fiscal solvency.

Top Five States

The top five most fiscally solvent states are Nebraska (#1), South Dakota (#2), Tennessee (#3), Florida (#4), and Oklahoma (#5).

Bottom Five States

The bottom five states in terms of fiscal solvency are Kentucky (#46), Massachusetts (#47), New Jersey (#48), Connecticut (#49), and Illinois (#50).

National Trends in Fiscal Health

Key State Findings

Conclusion

States face many fiscal problems, but these problems are not insurmountable. Studying how each state is performing with respect to a variety of fiscal indicators can help state policymakers address persistent issues and anticipate potential problems.

KEY MATERIALS

The Mercatus Center at George Mason University

by Eileen Norcross & Olivia Gonzalez

October 9, 2018



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