Red States Outperform Blue In Managing Taxpayer Money
Budgets: Pop quiz: What do the most fiscally sound states have in common? Good weather? Oil? Blind luck? Or is it conservative policies such as keeping taxes low, regulations reasonable and spending under control?
A new report from George Mason University's Mercatus Center ranks all 50 states based on 14 measures designed to determine whether states can pay their short-term bills and meet their long-term obligations — debt, pension liabilities and such. The data go through 2013.
The best-run states have enough cash to pay its current bills, enough revenue coming in to meet its fiscal year needs, a cushion for economic shocks, and management long-term liabilities.
The worst states, in contrast, have "tens, if not hundreds, of billions of dollars in unfunded liabilities -- constituting a significant risk to taxpayers in both the short and the long term."
When USA Today looked at the Mercatus ranking, they noticed that a few of these states have a lot of oil. "Energy-rich states are leading, and Northeastern states with big pension obligations lagging," it said.
But that doesn't explain why states like Florida or Ohio rank so high. Or why California, which has an overabundance of natural resources, is the seventh worst state in terms of fiscal health. (Oil-rich Texas, by the way, ranks 19th.)
Nor can you attribute states' fiscal health to things like the weather, since few are likely attracted to North Dakota for its winter season. And
Luck can't be the reason either. Ohio (seventh from the top) suffered from rust-belt deindustrialization as much as Pennsylvania (ninth from the bottom).
Location a factor? Doubtful. Otherwise, why would Illinois be so much worse off than the three other states that border Lake Michigan?
There's only one factor these fiscal winners and losers share in common. And that's their political leanings. Of the top 10 states in the Mercatus ranking, just two — Florida and Ohio — voted for the Democratic presidential candidate in the past four elections, and just one — Montana — has a Democratic governor. Even if you look at the 25 best-performing states, only three could be considered reliably liberal.
At the other end of the list, just two of the 10 lowest-ranked states — Kentucky and West Virginia — have voted for the Republican in the past four presidential elections. And while four of them have Republican governors, they all are in solid blue states and all were elected to clean up messes left by their Democratic predecessors.
It's also worth noting that these same states consistently show up at the top and bottom of other lists that measure business friendliness, tax burden and economic freedom.
In fact, six of the 10 worst-performing states in the Mercatus ranking — California, New York, Illinois, New Jersey, Massachusetts, and Connecticut — are also states with the heaviest tax burdens and rated the least business friendly, according to rankings from the Tax Foundation and Chief Executive magazine.
It would appear, then, that abiding by a philosophy of limited government, lower taxes and fewer regulations leads to growth, prosperity and fiscal soundness. So why is this lesson so hard for people to learn?
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http://news.investors.com/ibd-editorials/070815-760760-red-states-top-list-of-fiscal-soundness-ranking.htm
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