Using the four solvency indices above, Arnett creates an overall State Fiscal Condition Index. She improves on past research about fiscal metrics by weighting each solvency indicator based on the timeframe in which it will affect state residents. Although the ranking is a snapshot in time, the states at the bottom are there due to years of poor financial management decisions, bad economic conditions, or a combination of the two. New Jersey and Connecticut face similar problems: tax revenues that have not kept up with expenditures, use of budget practices that only appeared to balance their annual budgets, and significant debt levels as a result of decades of using bonds without being able to pay for them (State Budget Crisis Task Force 2012). In addition, both states have underfunded their pension systems, resulting in billions in unfunded liabilities.It's interesting to note which parts of the country have the better-run states...
Tuesday, January 14, 2014
The best and worst states for fiscal responsibility: