“Ranking the States by Fiscal Condition” is an annual report by George Mason University’s Mercatus Center. It’s a thorough investigation of states’ latest financial statements — a deep dive into cash on hand, short- and long-term debt, and unfunded pensions/healthcare benefits.
The Center analyzes five “dimensions of solvency” in order to determine overall fiscal condition:
* Cash solvency looks at whether a state has “enough cash on hand to cover its short-term bills.” New Mexico fares in the middle, ranking 30th.
* Budget solvency explores whether a state can “cover its fiscal year spending with current revenues.” The Land of Enchantment performs rather well here, landing in 19th place.
* Long-run solvency looks at whether a state has “enough money to cushion it from economic shocks or other long-term fiscal risks.” New Mexico achieves it best score in this category: 11th.
* Service-level solvency asks how “much ‘fiscal slack’ does a state have to increase spending if citizens demand more services.” The results for New Mexico are abysmal — only one state fares worse.
* Trust fund solvency is an estimate of how “large are each state’s unfunded pension and healthcare liabilities.” Ditto here, with a rank just one slot up from rock bottom.
Overall, New Mexico ranks 41st in fiscal condition, its worst performance since the Center began its research. Not surprisingly, each of our neighbors posted superior rankings: Arizona (33rd), Colorado (30th), Texas (23rd), Oklahoma (7th), and Utah (4th).