Connecticut is ranked dead last among the 50 states when it comes to overall fiscal health, according to a new study released this morning by George Mason University.
The report is blunt in its assessment of Connecticut’s fiscal solvency. It said Connecticut’s fiscal position is poor across all categories. With between only 0.46 and 1.19 times the cash needed to cover short-term liabilities, the state’s revenues matched only 94 percent of expenses, producing a deficit of $505 per capita, according to report author Eileen Norcross, a senior research fellow at the Mercatus Center at George Mason University.
A state’s ranking consists of its scores in the following categories:
- Cash solvency: Does your state have enough cash to cover its short-term bills?
- Budget solvency: Is your state taking in enough revenue to cover its fiscal year spending?
- Long-run solvency: Can your state meet its long-term spending commitments? Is it prepared for economic shocks or other risks?
- Service-level solvency: How much fiscal “slack” does your state have to increase spending if residents demand more services?
- Trust-fund solvency: How much in debt, unfunded pension liabilities, or health care obligations does your state have?
The report said Connecticut is not in the same dire position as Puerto Rico, which ranks 51st. It said the state’s economy is stronger than Puerto Rico’s, allowing it to better navigate fiscal crises, but the large debt level still raises serious concerns.
Also, Connecticut is heavily reliant on debt to finance its spending. With liabilities exceeding assets by 34 percent, per-capita debt is $9,077, the report said. Total debt is $20.88 billion. Unfunded pensions are $83.31 billion on a guaranteed-to-be-paid basis, and other postemployment benefits (OPEB) are $19.53 billion. Total liabilities are equal to 53 percent of total state personal income.
