July 11, 2017

#35 | Ranking the States by Fiscal Condition: Maine

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On the basis of its fiscal solvency in five separate categories, Maine is ranked 35th among the US states for its fiscal health, an improvement of eight places the previous fiscal year. On a short-run basis, Maine holds between 61 percent and 195 percent of the cash needed to cover short-term obligations. Revenues exceed expenses by 6 percent, and net position improved by $368 per capita. On a long-run basis, Maine’s net asset ratio is −0.26, and long-term liabilities are 52 percent of state personal income. Total primary government debt is relatively low at $1.21 billion, or $909 per capita. Unfunded pension obligations, on a guaranteed-to-be-paid basis, are $16.6 billion, or 30 percent of state personal income. OPEB is 3 percent of state personal income.

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Key Terms

  • 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. (Maine ranks 43rd.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Maine ranks 13th.)
  • 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? (Maine ranks 34th.)
  • 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? (Maine ranks 35th.)
  • 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? (Maine ranks 24th.)

For a complete explanation of the methodology used to calculate Maine's fiscal health rankings, download the full paper and the dataset at mercatus.org/statefiscalrankings.  

To read all our work on Maine, go to mercatus.org/states/maine.