A recent study by the Mercatus Center at George Mason University divided all fifty U.S. states – plus Puerto Rico – according to their financial solvency. The top five financially solvent states happen to be run by Republicans. And four of the bottom five are run by Democrats.
The study considered five different categories to rank each state: cash solvency, budget solvency, long-run solvency, service-level solvency, and trust fund solvency.
The study defined cash solvency as whether a state has “enough cash on hand to cover its short-term bills.”
Budget solvency deals with whether a state can “cover its fiscal year spending with current revenues” or whether it will have a “budget shortfall.”
Long-run solvency refers to whether a state can “meet its long-term spending commitments” and whether there will be “enough money to cushion it from economic shocks or other long-tem fiscal risks.”
Service-level solvency refers to how much “fiscal slack” a state has to “increase spending if citizens demand more services.”
Trust fund solvency is simply how much debt a state has and how large its “unfunded pension and healthcare liabilities” are.
Considering these five factors, the study found that these were the top five financially solvent states, ranking from first to fifth: Alaska, Nebraska, Wyoming, North Dakota, and South Dakota.
Considering the same factors, the study found that these were the bottom five states: Kentucky, Illinois, New Jersey, Massachusetts, and Connecticut.
All of the top five financially solvent states are GOP-run. Of the bottom five, only Kentucky is led by Republicans. The rest are Democrat-controlled. Puerto Rico ranked number fifty-one.