Louisiana’s financial condition ranks No. 37 in a new study by the Mercatus Center at George Mason University, which for the past five years has annually ranked the 50 states according to how well they can meet short-term and long-term bills.
“Louisiana has between 1.27 and 2.48 times the cash needed to cover short-term obligations,” reads the report. “Revenues only cover 96 percent of expenses, with an improving net position of $11 per capita. In the long run, Louisiana’s negative net asset ratio of 0.2 points to the use of debt and unfunded obligations.”
Louisiana’s long-term liabilities are at about the same level of the national average, at 65% of total assets, or $4,133 per capita. Total unfunded pension liabilities that are guaranteed to be paid are $100.41 billion, or 49% of state personal income.
The rankings are compiled from each state’s fiscal year 2016 reports and then apply trend analysis to reports for each year from 2006 until 2016.
Most states are in a stable condition, with the exception of the size of unfunded pension liabilities, which account for a large portion of most state government obligations.
Aside from the overall ranking, each state is ranked in five categories, with Louisiana receiving the following rankings:
- No. 31 for cash solvency; whether a state has enough cash to cover its short-term bills, which include accounts payable, vouchers, warrants, and short-term debt.
- No. 40 for budget solvency; a state’s ability to cover its fiscal year spending using current revenues.
- No. 38 for long-run solvency; whether a state has a hedge against large long-term liabilities.
- No. 24 for service-level solvency; measures how high taxes, revenues and spending are when compared to state personal income.
- No. 39 for trust fund solvency; how much debt a state has, including unfunded pension liabilities.
Nebraska is ranked No. 1 in the report, followed by South Dakota, Tennessee, Florida and Oklahoma. Illinois is ranked No. 50, preceded by Connecticut, New Jersey, Massachusetts and Kentucky.
