Thursday, April 24, 2014

The most economically stable states (25 items)

By and , Deseret News

Jan. 26, 2014

"State fiscal condition is multifaceted and difficult to measure," reads the abstract to a working paper published this month by Georgia State University's Sarah Arnett.

However, by measuring and ranking the "cash, budget, long-run and service-level solvency" of every state during fiscal year 2012, Arnett believes it is possible to rank each state in the union according to fiscal condition, and in fact does so in the paper. Utah, according to Arnett, has the 11th most stable economy in the country.

"The ongoing challenges to state governments' abilities to meet their financial and service obligations underscore the need for a reliable and strait-forward method to compare states' finances," Arnett argues in the study. "Without such methods of comparison, those inside and outside state government are left to wonder about the emerging trends in state finances and how states compare to each other."

To rank each state, Arnett used data from each state's Comprehensive annual financial report for 2012. From the reports, Arnett focused on 11 key indicators, all of which measures one of four categories:

Cash solvency, which Arnett explains measures a state's ability to "pay its bills."

Budget solvency, which in effect measures the debt to surplus ratio of the state.

Long-run solvency, which measures a state's ability to "pay the cost of doing business."

Service level solvency, which measures a state's ability to pay for "service obligations."

"An important conclusion of this paper is that while rankings inherently have top performers and bottom performers," Arnett explains in the paper's conclusion, "there is a substantial difference in state fiscal conditions." That "substantial difference" according to Arnett, is worth understanding in order to "test the effect of fiscal institutions."

So which states came out on top in the study? We've compiled the list of Arnett's top 25 states for economic stability.

1 of 25. Virginia

Fiscal condition index: -0.28

Population: 8,260,405

Median household income: $63,636

Persons below poverty level: 11.1 percent

2 of 25. Colorado

Fiscal condition index: -0.24

Population: 5,268,367

Median household income: $58,244

Persons below poverty level: 12.9 percent

3 of 25. Washington

Fiscal condition index: -0.23

Population: 6,971,406

Median household income: $59,374

Persons below poverty level: 12.9 percent

4 of 25. New Hampshire

Fiscal condition index: -0.21

Population: 1,323,459

Median household income: $64,925

Persons below poverty level: 8.4 percent

5 of 25. South Carolina

Fiscal condition index: -0.19

Population: 4,774,839

Median household income: $44,623

Persons below poverty level: 17.6 percent
1. RBB
Sandy, UT,
Jan. 27, 2014

Interesting list. Anyone notice that none of the top 25 are states on the far left of the political spectrum?

2. A_Chinese_American
Cedar Hills, UT,
Jan. 27, 2014

The rank of "solvency" make sense. So those states which control what they would spend by measuring what they get rank higher; those states just spending voter's money without self-control rank lower.

3. Hutterite
American Fork, UT,
Jan. 27, 2014

The dakotas; alaska. Oil makes the world go.

4. dmcvey
Los Angeles, CA,
Jan. 27, 2014

It could also be that the way this person chose her definitions was motivated by a conservative bias. I would need to study the paper more before I would give it any credences. And RBB--correlation is not causation.

5. Chris B
Salt Lake City, UT,
Jan. 27, 2014

dmcvey, keep telling yourself there is no causation here.

Pure coincidence.