Report: R.I. 37th worst for fiscal solvency

RHODE ISLAND ranked 37th for overall fiscal solvency, according to a report from the Mercatus Center at George Mason University. / COURTESY MERCATUS CENTER AT GEORGE MASON UNIVERSITY
RHODE ISLAND ranked 37th for overall fiscal solvency, according to a report from the Mercatus Center at George Mason University. / COURTESY MERCATUS CENTER AT GEORGE MASON UNIVERSITY

PROVIDENCE – Rhode Island ranked 37th for fiscal solvency, according to a report from the Mercatus Center at George Mason University.
Connecticut ranked last and was preceded by Massachusetts on the list. They were so low due to the low amounts of cash they have on hand and their large debt obligations, the report stated.
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 health care benefits. Puerto Rico also was included to provide a benchmark of poor fiscal performance – Puerto Rico was 51st on the list.
Fiscal 2014 data was used.
According to the report, on a cash basis, Rhode Island has between 0.86 and 1.73 times the cash needed to cover short-term liabilities. Revenue also exceeds expenses by 4 percent, for a surplus of $276 per capita. Rhode Island has a negative net asset ratio of −0.11, and total liabilities are 48 percent of total assets.
In addition, the Ocean State’s total debt is $2.67 billion. Unfunded pension liabilities are $14.97 billion on a guaranteed-to-be paid basis, and other post-employment benefits are $714 million. These three liabilities are equal to 35 percent of state personal income.
Comparing five measures of fiscal condition, Rhode Island rose to the top half of the states in only one category – budget solvency, where it ranked 22nd. That measures whether a state can cover its fiscal year spending using current revenue.

Its worst rank was 41st for cash solvency, which measures whether a state has enough cash to cover its short-term bills, including accounts payable, vouchers, warrants and short-term debt.

It ranked 39th in long-run solvency, measuring whether a state has a hedge against large long-term liabilities. “Are enough assets available to cushion the state from potential shocks or long-term fiscal risks?” the report authors asked.

It also ranked 34th in service-level solvency, which measures how high taxes, revenue and spending are when compared with state personal income.
And, it ranked 29th in trust fund solvency, measuring how much debt a state has. “How large are unfunded pension liabilities, OPEB liabilities, and state debt compared to the state personal income?” the authors said.

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