July 11, 2017

#44 | Ranking the States by Fiscal Condition: Louisiana

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On the basis of its fiscal solvency in five separate categories, Louisiana ranks 44th among the US states for its fiscal health, down from 33rd in the previous year. On a short-run basis, Louisiana has between 1.62 and 2.81 times the cash needed to cover short-term obligations. Louisiana performs most poorly on a budgetary basis. Revenues cover 94 percent of expenses, and its net position is unchanged from the previous year. On a long-run basis, Louisiana has a negative net asset ratio of 0.20. Long-term liabilities are 65 percent of total assets, or $4,197 per capita. Total primary government debt is $12.6 billion, or 6.2 percent of state personal income, double the average in the states. Unfunded pension liabilities, on a guaranteed-to-be-paid basis, are $83.86 billion, or 42 percent of state personal income. OPEB is 4 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. (Louisiana 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? (Louisiana ranks 47th.)
  • 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? (Louisiana ranks 37th.)
  • 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? (Louisiana ranks 22nd.)
  • 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? (Louisiana ranks 38th.)

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

To read all our work on Louisiana, go to mercatus.org/states/louisiana.