A recent study shows the 10 most financially sound states in the nation are all heavily Republican, while all but one of the 10 worst states are heavily Democrat. Not only did Texas not make the leaderboard, but it’s lagging far behind, ranking 22nd best overall.
The study—entitled “Ranking the States by Fiscal Condition in 2018”—was published by the Mercatus Center at George Mason University. Nebraska was ranked the best, with Illinois in the last place. Flanking Texas in 22nd place was the State of Indiana, in 21st place, and Ohio, at 23rd.
Aside from the fiscal train wreck that is the State of Illinois, the top 10 worst list was stacked with the progressive bastions of New York, California, Delaware, New Mexico, Massachusetts, New Jersey, and Connecticut. The Republican-leaning exceptions on the “worst” list were Kentucky and West Virginia.
The study analyzed five dimensions: cash solvency, budget solvency, long-run solvency, service-level solvency, and trust-fund solvency. Texas performed above average in some and below average in others.
Cash solvency measures whether a state has enough cash to cover its short-term bills. Texas ranks an abysmal 34th but has moved in a healthier direction since 2006.
Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Texas ranks mid-pack at 24th and has declined slightly over the past decade.
Long-run solvency measures whether a state has a hedge against long-term liabilities. Texas ranks 13th, its highest-ranked dimension, but is quickly moving in the wrong direction.
Trust-fund solvency measures how much debt a state has, including its unfunded pension and Other Post Employment Benefit (OPEB) liabilities, when compared to the ability of its residents to repay. While Texas currently ranks 15th best, the state’s trust-fund solvency is worsening at an alarming rate, driven primarily by a ballooning pension crisis.
But it gets worse. Rather than Texas lawmakers reforming the state’s long-term pension liabilities in 2019, the Republican-majority legislature worsened the problem by offering new benefits to retired government employees. Doing so has hurt the state’s ability to make good on its promises to them, including to retired teachers.
While campaign rhetoric from Republican officials often characterizes Texas as a fiscally responsible leader, the evidence proves Texas has a lot of catching up to do.