Utah State Treasurer David C. Damschen announced that Utah has been ranked one of the top five most fiscally healthy states in the nation by the George Mason University Mercatus Center.
Entitled “Ranking the States by Fiscal Condition 2017 Edition,” this widely regarded report comparatively determines state financial health through thorough analysis of each state’s revenues, expenditures, cash, assets, liabilities, debt, and ability to meet both short and long-term financial obligations. Utah is ranked fourth in the nation – with Illinois and New Jersey falling last.
“Utah policymakers must be extremely vigilant in considering both the short and long-term fiscal consequences of every policy decision – because ultimately all policy decisions in some way directly affect our State’s fiscal health,” said Treasurer Damschen. “Utah is currently a national fiscal leader with enviable economic growth due largely to our staunchly conservative approach to state finances, and I applaud the Utah team for this collective achievement. Fiscally conservative financial practices prevail long-term – plain and simple.”
From the Report – Top Five States
Florida, North Dakota, South Dakota, Utah, and Wyoming rank in the top five states. According to the report, “top-performing states tend to have higher levels of cash, low unfunded pensions, and strong operating positions.”
Low debt and a strong cash position help maintain fiscal discipline.Keeping debt levels low, saving cash to pay bills, and maintaining solvent budgets reflect a culture of fiscal discipline. The first-place position of Florida in particular demonstrates that this is possible even with a relatively larger population and higher pension costs that arise from an aging population.
Oil and gas revenues play a role in short-term fiscal health. The top-performing states owe some of their success to unpredictable revenue sources. As oil prices have been declining, however, we see this detrimentally affecting their budgets. Alaska has moved out of the top five, and Wyoming has moved from third to fifth as a result. North Dakota’s revenues also declined and have the potential to impact their future rankings.
Pensions and health care still pose long-term challenges to top-performing states. While these top five states are considered fiscally healthy relative to other states because they have significant amounts of cash on hand and relatively low short-term debt obligations, each state, especially Wyoming, faces substantial long-term challenges related to its pension and healthcare benefits systems.
The top five states have changed since last year.Alaska and Nebraska dropped out of the top five, allowing Florida and Utah to join. North Dakota and South Dakota improved from fourth and fifth to second and third, respectively, pushing Wyoming down two spots to fifth place.