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The Bottom 5 US States In Fiscal Condition

  • Written by Syndicated Publisher No Comments Comments
    January 21, 2014

    Inquiring minds are digging into a George Mason University paper on State Fiscal Conditions, a ranking of 50 states, by Sarah Arnett.

    PolicyMic Produced this Chart of State Fiscal Conditions based on the working paper.

    Highlights and Lowlights

    Let’s return to the original working paper for some highlights and lowlights.

     At the bottom of the rankings are New Jersey and Illinois. New Jersey faces long-run solvency problems due in part to nearly 15 years of underfunding its state and local pensions. It has an estimated unfunded pension liability of around $25.6 billion as well as $59.3 billion in unfunded liabilities for the health benefits of retired teachers, police, firefighters, and other government workers (State Budget Crisis Task Force 2012).

    Illinois has also underfunded its public pensions, resulting in an estimated state retirement system combined unfunded liability of $ 96.8 billion as of 2012 (Illinois Commission on Government Forecasting and Accountability 22 2013). To cover the costs of its pension obligations, Illinois has also sold bonds to cover its annual contributions — 60 percent of Illinois’ total outstanding debt is in pension bonds (State Budget Crisis Task Force 2012). In essence, Illinois is using long-term debt instruments to meet current year pension obligations.

    [In Contrast] Nebraska is constitutionally prohibited from incurring debt. As such, the long-term liabilities reflected in Nebraska’s long-run solvency score are mainly due to claims payable for worker’s compensation, Medicaid claims, and other employee-related items. With no significant bond debt, Nebraska has a much lower long-term liability per capita and a much lower long-term liability ratio than most other states.

    Bottom 5 in Long-Term Solvency

    In terms of long-term solvency (the most critical issue), New Jersey and Illinois are at the bottom of the heap. Pension plans and union activism are to blame.

    All five states at the bottom of the list have one thing in common: they got that way via “progressive” extreme-liberal politics, fueled by union activism, and promises that cannot possibly be met.

    Compare to the top five.

    Top 5 in Long-Term Solvency

    The top five states all have something in common as well: none of them are the hotbed of “progressive” activism and unions.

    Although there are other issues, I strongly suggest the performance of the top five and bottom five is directly related to “progressive” politics.

    Read more at

    http://globaleconomicanalysis.blogspot.com/2014/01/bottom-5-states-in-fiscal-condition-new.html#uyrOV2eQJK3hgK8M.99

    Images: Flickr (licence attribution)

    About The Author

    Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.  Visit Sitka Pacific’s Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

    You are currently viewing my global economics blog which typically has commentary every day of the week. I am also a contributing “professor” on Minyanville, a community site focused on economic and financial education.  Every Thursday I do a podcast on HoweStreet and on an ad hoc basis contribute to many other sites.

    When not writing about stocks or the economy I spend a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com.

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