Adam Millsap, Mercatus Center: Ranking States’ Fiscal Stability
Are your state’s finances on solid ground? Mercatus Center research fellow Adam Millsap breaks down the numbers from a new report examining every state’s books, and what it means for you.
In this episode of the weekly Budget & Tax News podcast, research fellow and managing editor Jesse Hathaway talks with Mercatus Center at George Mason University’s Adam Millsap, about a new report ranking all 50 states on their fiscal stability.
The 2017 edition of Mercatus Center’s Ranking the States by Fiscal Condition report, Millsap says, uses comprehensive annual financial reports from all 50 states to measure the stability of state governments’ financial books. The study ranks each state’s financial health, based on short- and long-term debt and other key fiscal obligations, such as unfunded pensions and healthcare benefits, Millsap says, breaking down hundred-page reports into a convenient easy-to-read format.
Growing long-term obligations for pensions and healthcare benefits are straining the finances of every state, Millsap says, and over-reliance on volatile tax revenue sources like oil production threatens the fiscal health of top-performing states, such as North Dakota and South Dakota.
Top-performing states demonstrate fiscal discipline by keeping high levels of cash reserves for “rainy days,” maintaining revenues exceeding expenses, and keeping debt levels low, Millsap says. On the other hand, poorly-performing states fail to address long-term drivers of debt, and are not prepared for recessions or other economic storms.