State Government


– A new report from George Mason University says a lot.

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Today we hear stories about the economic instability of state governments, rising taxes, potential bankruptcies, etc. Are these flukes of just bad policies and administration? According to a recent report from the Mercatus Center at George Mason University, it appears success is not by accident, and Republicans appear to do a better job than their Democratic counterparts.

The Mercatus report, titled “Ranking the States by Fiscal Condition” (June 1, 2016), examined the financial stability of the fifty states, plus Puerto Rico. The report considered debt and financial obligations, as well as state pension programs and health care benefits. Not surprising, Puerto Rico, with its pending bankruptcy, was rated dead last (#51).

The TOP 10 states demonstrating financial solvency include:

#1 Alaska #2 Nebraska #3 Wyoming #4 North Dakota #5 South Dakota #6 Florida #7 Utah #8 Oklahoma #9 Tennessee

#10 Montana

The BOTTOM 10 states not demonstrating financial stability include:

#41 Maryland #42 New York #43 Maine #44 California #45 Hawaii #46 Kentucky #47 Illinois #48 New Jersey #49 Massachusetts #50 Connecticut

#51 Puerto Rico

Perhaps the most noteworthy observation made was that all of the Top 10 states are Republican controlled, meaning both the Governor and the legislatures are in GOP hands. Further, with the exception of Kentucky, all of the bottom 10 states, plus Puerto Rico, are controlled by the Democrats. In New Jersey, the Governor is Republican, but both houses of the legislature are controlled by the Democrats.

Let’s examine the differences between #1 Alaska and #50 Connecticut. According to the Mercatus report:

Alaska: “Given Alaska’s reliance on oil revenues, the state has between 22.46 and 23.44 times the cash needed to cover short-term liabilities. Revenues exceed expenses by 55 percent, producing a surplus of $8,296 per capita. On a long-run basis, net assets represent 85 percent of total assets, and liabilities are 3 percent of total assets.”

Connecticut: “Connecticut’s fiscal position is poor across all categories. With between only 0.46 and 1.19 times the cash needed to cover short-term liabilities, Connecticut’s revenues matched only 94 percent of expenses, producing a deficit of $505 per capita. The state is heavily reliant on debt to finance its spending. With a negative net asset ratio of -0.88 and liabilities exceeding assets by 34 percent, per capita debt is $9,077. Total debt is $20.88 billion. Unfunded pensions are $83.31 billion on a guaranteed-to-be-paid basis, and other postemployment benefits (OPEB) are $19.53 billion. Total liabilities are equal to 53 percent of total state personal income.”

The difference between the two states is rather obvious, one has developed assets and works to live within its means; the other relies on deficit spending thereby adding to the state’s debt.

Beyond assets and liabilities, the programs established for social services and employment varies. For example, with the exception of Alaska, all of the Top 10 are “Right to Work” states, and none of the Bottom 10 have a “Right to Work” program.

From the Mercatus report, you can conclude Republican states take their fiduciary responsibility more seriously. The Democratic states seem to possess a credit card mentality where they spend and spend on social programs and civic projects without considering how to pay for them, causing the states to lean towards a Puerto Rican bankruptcy scenario.

I invite you to examine the report and consider how well your state is managing its financial resources. Click HERE.

Also published with News Talk Florida.

Keep the Faith!

Note: All trademarks both marked and unmarked belong to their respective companies.

Tim Bryce is a writer and the Managing Director of M&JB Investment Company (M&JB) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at [email protected]

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Copyright © 2016 by Tim Bryce. All rights reserved.


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