On the basis of its solvency in five separate categories, Iowa ranks 29th among the US states for fiscal health. How does your state rank?
On the basis of its solvency in five separate categories, Iowa ranks 29th among the US states for fiscal health. Iowa has between 1.39 and 2.47 times the cash needed to cover short-term obligations. Revenues exceed expenses by 3 percent, with an improving net position of $182 per capita. In the long run, Iowa has a net asset ratio of 0.16. Long-term liabilities are lower than the national average, at 22 percent of total assets, or $1,656 per capita. Total unfunded pension liabilities that are guaranteed to be paid are $56.39 billion, or 38 percent of state personal income. OPEB are $0.64 billion, or less than 1 percent of state personal income.
Cash solvency measures whether a state has enough cash to cover its short-term bills, which include accounts payable, vouchers, warrants, and short-term debt. (Iowa ranks 26th.)
Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Iowa ranks 23rd.)
Long-run solvency measures whether a state has a hedge against large long-term liabilities. Are enough assets available to cushion the state from potential shocks or long-term fiscal risks? (Iowa ranks 12th.)
Service-level solvency measures how high taxes, revenues, and spending are when compared to state personal income. Do states have enough “fiscal slack”? If spending commitments demand more revenues, are states in a good position to increase taxes without harming the economy? Is spending high or low relative to the tax base? (Iowa ranks 41st.)
Trust fund solvency measures how much debt a state has. How large are unfunded pension liabilities and OPEB liabilities compared to the state personal income? (Iowa ranks 25th.)
For a complete explanation of the methodology used to calculate Iowa's fiscal health rankings, download the full paper and the dataset at mercatus.org/statefiscalrankings.