Report flags states' fiscal warning signs
A recent Reason Foundation study evaluated all 50 states using eight financial metrics, divided into long-term and short-term indicators. The study assigns red flags for poor performance on measures such as debt ratio, unrestricted net position, revenue versus spending, liabilities per capita, and quick ratio. The column discusses these warning signs for state financial health.
The Reason Foundation reviewed all 50 states using eight fiscal measures, split evenly between long-term and short-term concerns. A red flag marked weak results. Twenty-three states earned none. New Jersey had six, Connecticut four, while California, Hawaii, Illinois, Massachusetts, North Dakota and Pennsylvania each had three; Vermont, Washington, New York and Delaware had two.
Hawaii's 2023 data showed $27.5 billion in total liabilities, or $18,909 per resident. Its unrestricted net position was -$7.4 billion, and cash made up 7.5% of assets, though current obligations could be covered. The state also recorded a $2,566 per-person operating surplus that year.
These findings may influence how residents and taxpayers assess their state's fiscal condition. If warning signs persist, governments could face tighter choices about spending, revenue, or debt, and taxpayers might bear more difficulty servicing obligations. Hawaii's negative unrestricted position and high per-person liabilities may draw scrutiny, while its operating surplus could temper concerns.