We’ve spent a lot of time of late discussing the precarious financial positions of states like Illinois, Connecticut and New Jersey which each suffer from their own myriad of financial threats including massive budget deficits, monstrous unfunded pension liabilities, pending debt downgrades, etc. In case you’ve missed those notes, here is a recap for your amusement:
Illinois State Official: “We Are In Massive Crisis Mode, This Is Not A False Alarm” “From Horrific To Catastrophic”: Court Ruling Sends Illinois Into Financial Abyss Connecticut Capital Hartford Downgraded To Junk By S&P Connecticut Gov. Signs Exec. Order Taking Over Spending After State Fails To Pass Budget Of course, while Illinois gets all the bad press for being the undisputed champion of the “worst state in the union” honor, there are many other “up and comers” (yes, we’re looking at you California with your massive unfunded pension obligation) aggressively vying for the title.
In fact, the Mercatus Center at George Mason University (GMU) has recently compiled a fairly comprehensive study, based on a number of objective financial metrics, ranking the 50 U. S. states according to their overall fiscal condition. Among other things, GMU analyzed the following metrics:
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? All of which resulted in the following ranking map.
This post was published at Zero Hedge on Jul 11, 2017.
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