Springfield, Ill. – The Mercatus Center at George Mason University recently released a study ranking the 50 states according to their financial condition, with Illinois coming in last.
The study has been done for five years in a row now. Each edition has provided a snapshot of each state’s fiscal health by providing information from audited state financial reports. State finances are analyzed according to five dimensions: Cash solvency, Long-run solvency, Budget solvency, Service-level solvency, Trust fund solvency.
The study measured how well states can meet short-term and long-term bills by examining their financial statements. Most states are in a stable condition, with the exception of the size of unfunded pension liabilities. Some states also have consistently low levels of cash, which indicate the potential for budget shortfalls during a recession.
The top five most fiscally solvent states are Nebraska (#1), South Dakota (#2), Tennessee (#3), Florida (#4), and Oklahoma (#5), with the bottom five being Kentucky (#46), Massachusetts (#47), New Jersey (#48), Connecticut (#49), and Illinois (#50).
Illinois has performed poorly in each edition of the study. The study suggests that states that continuously performed poorly have experienced ongoing structural deficits, a growing reliance on debt to fund spending, underfunded pensions and other post employment benefit liabilities, or some combination of these problems.