In a post at the National Review Online's blog. The Corner, last week, Veronique de Rugy wrote about a new Mercatus Center study, which looks at the solvency of the states. (HT Potemkin). She says the report:
"examines states’ abilities to meet their financial obligations. For the most part . . . they can’t. Most states have seen gains in tax revenues and pension assets after the recession, but according to the Government Accountability Office, this hasn’t been enough to transform their long-term fiscal outlooks, which remain mostly negative. The GAO’s simulations predict that states will have repeated annual difficulties balancing revenues and expenditures, largely because of rising health-care costs and the cost of funding state and local pensions."
Ms. de Rugy notes the five "best" states were Alaska, South Dakota, North Dakota, Nebraska, and Wyoming while the "worst" included New Jersey (#50), Connecticut (#49), Illinois (#48), Massachusetts (#47), California (#46), New York (#45), and Maryland (#44). The map below provides the ranking of each of the 50 states:
Ms. de Rugy includes the usual background information about Sarah Arnett, author of the Mercatus study and how the several indices were constructed. In addition, she compares the ranking with another study, Freedom in the Fifty States published early in 2013. However, she says, "no matter , New Jersey, New York, California, and Illinois are always at the bottom of the heap, or not far from it."
In a separate report for Watchdog.org's Virginia Bureau, posted at Townhall.com, Kathryn Watson notes, "Virginia lawmakers are famous for saying the commonwealth is in superb fiscal shape, at least, compared to the rest of the country, adding that lawmakers will "mention that Forbes named Virginia the best state to do business in 2013." She also fleshes out some of the details, which enabled Virginia to rank #25 this way:
"To come up with the overall fiscal condition index, Arnett ranked each state in four categories — cash solvency (a state’s ability to pay its bills in the near term), budget solvency (a state’s ability to generate enough revenue to cover expenditures over a fiscal year), long-run solvency (a state’s ability to cover all its expenditures, such as pension obligations), and service-level solvency (whether a state has enough resources to provide its residents with adequate services).
"Virginia scored 13th in service-level solvency and 18th in budget solvency — not great, but certainly not the worst.
"But its overall ranking took a hit in long-run fiscal solvency (28th) and in cash solvency (29th).
"In a nutshell, Virginia is struggling to pay its bills in the short-term and its debt obligations in the long-term, according to the study’s findings.
"The state’s underfunded pension system isn’t helping."
Ms. Watson offers little hope, unfortunately, for the Commonwealth:
"Still, if the bills filed so far are any indicator, it doesn’t appear as though lawmakers will be seriously tackling the pension problem in 2014."
New Jersey's #50 ranking drew the attention of the Cato Institute's Dan Mitchell, who wrote in a Townhall.com column today that his "immediate reaction was to think that the problem could have been avoided if the bridge and its various entry points were privately owned. Sort of like the Ambassador Bridge between Canada and Michigan, which is the busiest border crossing in North America. Or the Progreso International Bridge, a major transportation link between Mexico and Texas.
John Merline in a column for Investor's Business Daily pointed out the Mercatus report's author, "found that New Jersey's revenues aren't keeping up with expenditures, and that the state uses fiscal practices that "only appear to balance its annual budgets." Merline also pointed out:
"The study also shows that Republican governors appear overall to do a better job running a sound fiscal ship than Democrats.
"Of the top 10 most fiscally sound states, all but one — Montana — have a Republican governor. And Montana is generally a conservative state, having voted for the GOP candidate in each of the past five presidential elections."