American Elephants


Ranking the States for their Fiscal Reliability by The Elephant's Child

Here in greater Seattle, following national publicity surrounding the Seattle debacle with raising the minimum wage, the Seattle City Council has determined that it would be a good idea to raise taxes on the rich.  They passed an ordinance.  It will be challenged in court, for the Washington state constitution says they can’t have an income tax, and their plan clearly defines who is rich and who is richer, and has to pay even more.

Several states have decided to raise taxes this year to cover budget shortfalls. A new study suggests that the states might find themselves in worse financial shape after the money starts rolling in. (Leftists do not understand the free market. That’s why they are Leftists.)

According to the latest ranking of states by the Mercatus Center at George Mason University, the most fiscally sound states in the country are all low-tax, GOP strongholds, while the 10 least-solvent states are almost all high-tax and heavily Democratic.

The rankings in the fourth-annual “Ranking of the States by Fiscal Condition” report, which was released this morning, are based on an review of audited financial statements for 2015 covering five measures that gauge the states’ ability to pay their bills, avoid budget deficits,  meet long-term spending needs and cover pension liabilities.

Cash solvency measures a state’s ability to pay immediate bills. Budget solvency focuses on whether states will end the year with a surplus or deficit. Service-level solvency gauges a state’s ability to meet a demand for increased spending. Long-run solvency concerns a states’ ability to meet longer-term spending commitments. Trust fund solvency  examines the states’ unfunded pension liabilities and state debt.

The 25 most-solvent states are solidly Republican except for four. Of the bottom least-solvent states, all but five are solidly Democratic. The most fiscally sound states also tend to have the lowest tax burdens, according to a separate analysis by the Tax Foundation.

The Mercatus Center Analysis can be found here, along with a map which includes more separation of the states into groups. The bottom line seems to be that the more money the state government takes from taxpayers, the worse they do in handling it. That should be surprising, but it’s not.

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