Mercatus: Georgia ranks 28th in state fiscal condition

The Mercatus Center at George Mason University released a working paper this week which offers a look at various aspects of state finances and solvency, ranking them by fiscal condition.

“State fiscal condition is multifaceted and difficult to measure,” wrote Dr. Sarah Arnett, a graduate of Georgia State University and analyst at the Government Accountability Office (GAO). “Using a method developed in previous research, I create the cash, budget, long-run, and service-level solvency indices using
fiscal year 2012 data to measure the dimensions of fiscal condition.”

Georgia ranks 30th in cash solvency, 36th in budget solvency, 32nd in long-run solvency, according to the paper. The state ranks 8th in service-level solvency, which is measured using taxes and revenue per capita, along with expenditures per capita.

In terms of overall fiscal condition, which is determined by the four other solvency measures, Georgia ranks 28th. Here’s the full ranking of states:

Map-Table-9

“The five states with the highest-ranked overall fiscal condition are Alaska, South Dakota, North Dakota, Nebraska, and Wyoming,” wrote Arnett. “The five states with the lowest-ranked fiscal condition are New Jersey, Connecticut, Illinois, Massachusetts, and California.”

“The top five states all had a surplus in fiscal year 2012 as measured by an increase in net assets, but there are differences in their underlying strengths. I find that the states with the worst fiscal condition have had years of poor financial management across the different dimensions of fiscal condition,” she added.

Correction: The Mercatus Center is based at George Mason University, not George Washington University, as an earlier version of the post stated.

State Fiscal Condition: Ranking the 50 States

8 comments

  1. saltycracker says:

    Georgia would be served by understanding the variables that reflect us poorly in any learned analysis by a well regarded institution.

  2. Will Durant says:

    Why not just use Moody’s bond ratings as they are pretty much putting their money where their mouth is:

    AAA
    Alaska, Delaware, Florida, Georgia, Indiana, Iowa, Missouri, Nebraska, Nevada, North Carolina, Utah, Virginia, Wyoming

    AA+
    Idaho, Kansas, Massachusetts, Minnesota, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, Vermont, Washington

    AA
    Alabama, Arkansas, Colorado, Connecticut, Hawaii, Louisiana, Maine, Maryland, Mississippi, Montana, New Hampshire, New York, Pennsylvania, Rhode Island, West Virginia, Wisconsin

    AA–
    Arizona, Kentucky, Michigan, New Jersey

    A
    California

    A–
    Illinois

    • saltycracker says:

      A diversity of measuring variables makes it wise to look at different approaches – recall it was Moody’s trained by Goldman Sachs that rated bundles of mortgages as AAA so they could sell them to institutions restricted to AAA….then CDO oops !

      So why is GA AAA with Moody’s and yet 28 on this list ? Once that is answered we are closer to a buy or sell decision.

      • Harry says:

        I sent the George Mason public affairs officer a link to your post pointing out this apparent methodology discrepancy, suggesting that Dr. Arnett may wish to respond.

      • Harry says:

        Here is the feedback from the public relations officer:

        Hi Harry, and thanks for the note. I asked Dr. Arnett about it, and she pointed to the part of the paper which looks at why S&P’s rankings may differ from her own. The answer for Moody’s would probably be similar–they’re measuring different things.

        Her goal with this study was to present a new methodology, and she acknowledges that other approaches have their merits as well.

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