ARLINGTON, VA — North Carolina lands just about in the middle – at number 27 – in a detailed ranking of the fiscal health of every state by the Arlington, VA-based Mecatus Center at George Mason University.
In its more detailed analysis, North Carolina is on the low side of cash solvency, moderate budget solvency, moderate long term and service level and trust fund solvency, The state ranks a dismal 42nd in cash solvency.
Cash solvency measures whether a state has enough cash to cover its short-term bills, which include accounts payable, vouchers, warrants, and short-term debt. In FY 2013 North Carolina’s cash position was weak. The state had only 80 percent of the most liquid forms of cash on hand to cover short-term bills. North Carolina had revenues 6 percent greater than expenses in FY 2013 and realized a surplus of $290 per capita.
Doing better in some categories
NC does a bit better, coming in at 24th in long term solvency and 24th in service level solvency. Its a lot better in trust fund sovency, ranking a high 9th. Trust fund solvency measures how much debt a state has. How large are unfunded pension liabilities, other postemployment benefits. liabilities, and state debt compared to the state personal income? When calculated on a guaranteed-to-be paid basis, North Carolina’s total unfunded pension liability was 17 percent of total state personal income
The state ranks 18th in budget solvency, which measures whether a state can cover its fiscal year spending out of current revenues.
“These rankings are an early warning system for policymakers, journalists, and the public,” said the study’s author, Mercatus senior research fellow Eileen Norcross in a statement. “While no ranking can capture all of a state’s fiscal dynamics, these can serve as a tool to guard against short-term and long-term risks or economic shocks.”
Increasing revenues are shrinking budget gaps in many states, but the report notes there are clouds on the horizon in the form of growing health care and pension cost commitments and credit rating downgrades.
Top Five States
Alaska, North Dakota, South Dakota, Nebraska, and Florida rank in the top five states.
While these states are considered fiscally healthy relative to other states because they have significant amounts of cash on hand and relatively low short-term debt obligations, each state faces substantial long-term challenges concerning its pension and health care benefits systems.
States that carry low levels of debt and spending rank highly, as do those with the built-in advantage of abundant oil and gas revenues. States with structural financial problems and unsustainable pension systems place at the bottom.
Bottom Five States
Illinois, New Jersey, Massachusetts, Connecticut, and New York rank in the bottom five states, largely owing to low amounts of cash on hand and large debt obligations.
High deficits and debt obligations in the forms of unfunded pensions and health care benefits continue to drive each state into fiscal peril. Each holds tens, if not hundreds, of billions of dollars in unfunded liabilities—constituting a significant risk to taxpayers in both the short and the long term.
The full report is here: http://mercatus.org/statefiscalrankings
Details on North Carolina: http://mercatus.org/statefiscalrankings/northcarolina
Overall State Fiscal Health Rankings:
1. Alaska
2. North Dakota
3. South Dakota
4. Nebraska
5. Florida
6. Wyoming
7. Ohio
8. Tennessee
9. Oklahoma
10. Montana
11. Utah
12. Nevada
13. Alabama
14. Missouri
15. Idaho
16. Indiana
17. South Carolina
18. Iowa
19. Texas
20. New Hampshire
21. Virginia
22. Colorado
23. Washington
24. Kansas
25. Oregon
26. Georgia
27. North Carolina
28. Wisconsin
29. Arkansas
30. Delaware
31. Minnesota
32. Arizona
33. Mississippi
34. Michigan
35. Louisiana
36. New Mexico
37. Maryland
38. Rhode Island
39. Vermont
40. Hawaii
41. Pennsylvania
42. Maine
43. West Virginia
44. California
45. Kentucky
46. New York
47. Connecticut
48. Massachusetts
49. New Jersey
50. Illinois
