Tennessee ranks eighth in financial health, study says

Tennessee ranks eighth in financial health, study says

Tennessee ranks eighth among all the 50 states for fiscal health, according to a study released this week by the Virginia-based Mercatus Center.

Mercatus is a free-market think tank that focuses on free-market economics.

“The authors note that Tennessee’s ‘Total primary government debt is $2.18 billion, or 0.8 percent of state personal income, which is among the lowest in the states,” according to a press release.

“Unfunded pension liabilities, on a guaranteed-to-be-paid basis, are $44.62 billion, or 16 percent of state personal income. OPEB is 1 percent of state personal income.”

Photo courtesy of the Mercatus Center.

Among the study’s other findings, as they pertain to Tennessee:

• On a short-run basis, Tennessee has between 3.72 and 5.29 times the cash needed to cover short-term obligations.

• Revenues exceed expenses by 5 percent, and net position improved by $213 per capita in FY 2015.

• Net assets are 12 percent of total assets after debts have been paid.

• Long-term liabilities are 10 percent of total assets, or $585 per capita.

Study authors Eileen Norcross and Olivia Gonzalez ranked Florida as the most fiscally healthy state with North Dakota, South Dakota, Utah, and Wyoming filling out the remainder of the top five states.

“Maryland, Kentucky, Massachusetts, Illinois, and New Jersey rank in the bottom five states, largely a result of the low amounts of cash they have on hand and their large debt obligations,” according to the authors.

The study ranked each state’s financial health based on short- and long-term debt and other key fiscal obligations, such as unfunded pensions and healthcare benefits, according to the report.

“Top-performing states tend to exhibit fiscal discipline in the form of having high levels of cash, maintaining revenues that exceed expenses, and keeping debt levels low relative to resident income,” the authors wrote.

“These factors can easily be threatened if a state relies too heavily on narrow tax bases and volatile revenue sources or if pension plans are not adequately funded, leading to persistently large and growing liabilities.”

The authors noted in a press release that Tennessee ranks four spots higher than Alabama.

Contact Christopher Butler at chris@tennesseewatchdog.org

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