by NW Spotlight
In January 2014 the Mercatus Center at George Mason University released a study titled State Fiscal Condition – Ranking the 50 States. It included a Ranking of States Long-Run Solvency using data from FY 2012. Oregon ranked 31st in long-run solvency – in the bottom half of states.
The Mercatus Center explains “Long-run solvency measures a state’s ability to use incoming revenue to cover all its expenditures, including long-term obligations such as guaranteed pension benefits and infrastructure maintenance.”
Two causes of the long-run solvency problems are rising health care costs and the cost of funding state and local pensions: “Fiscal simulations by the Government Accountability Office suggest that despite states’ recent gains in tax revenues and pension assets, the long-term outlook for states’ fiscal condition is negative (GAO 2013). These simulations predict that states will have yearly difficulties balancing revenues and expenditures due, in part, to rising health care costs and the cost of funding state and local pensions.”
The best five states for long-run solvency are: Nebraska, Alaska, Indiana, Tennessee and Alabama.
The worst five states for long-run solvency are: New Jersey, Illinois, Connecticut, Massachusetts and California.
Neighboring Washington State is 41st.