For the fiscal health of the states, Republicans are dominating Democrats.
According to a report from the Mercatus Center at George Mason University, traditionally Republican states have had a combination of strong economic growth, level-headed governance, and an eye toward long-term solvency.
“The 10 most fiscally solvent states are almost entirely solidly Republican, while the 10 least solvent are almost all solidly Democratic,” John Merline wrote for Investors.
The rankings order “financial health based on short- and long-term debt and other key fiscal obligations, such as unfunded pensions and healthcare benefits.”
Alaska leads all states, followed by Nebraska, Wyoming, North Dakota, South Dakota, Florida, Utah, Oklahoma, Tennessee, and Montana.
Connecticut is in the worst financial shape, followed by Massachusetts, New Jersey, Illinois, Kentucky, Hawaii, California, Maine, New York, and Maryland.
All the credit — and blame — doesn’t follow partisan lines. In North Dakota, South Dakota, and Wyoming, for instance, revenues and economic growth from natural gas and oil have driven budget surpluses and an economic miracle. Luckily, the short-term tendencies of politicians weren’t quick to spend those new revenues, instead opting to keep state budgets fiscally sound. The growth was spurred by state residents, not politicians.
Which isn’t to say that politicians aren’t skilled at taking a golden goose and cooking it.
“Growing long-term obligations for pensions and healthcare benefits continue to strain the finances of state governments, highlighting the fact that state policymakers must be vigilant to consider both the short-term and the long-term consequences of their decisions,” Eileen Norcross and Olivia Gonzalez wrote in the report summary.
“Massive debt obligations” and “unfunded liabilities” sank Connecticut to the bottom of the list, much like its worst-off companions. Problems with cash solvency, spending beyond state revenues, engaging in debt finance, and unfunded obligations for state employees have kept those states in a weak position.
“New Jersey’s ongoing challenges with debt for school construction bonds, pension bonds, and pay-as-you-go finance for OPEB drive the state’s poor longterm outlook. Long-term liabilities are two times larger than assets,” Norcross and Gonzalez wrote.
The situation is similar for other states.
“Illinois’s liabilities exceed total assets by 48 percent,” they noted.
Those missteps threaten Democratic control as well as economic growth. Though the least-solvents are deeply Democratic, Massachusetts, New Jersey, Kentucky, Illinois, Maine, and Maryland now have Republicans in office as governor.
Those governors, such as Massachusetts Gov. Charlie Baker, have been called “the bluest” Republicans, usually seen as pragmatic and light on ideology. They might be fiscally conservative, but tend to lean socially liberal. When states are fiscally mismanaged, blue states have turned to Republicans to correct their missteps.
