October 9, 2018

#45 | Ranking the States by Fiscal Condition: New Mexico

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On the basis of its solvency in five separate categories, New Mexico ranks 45th among the US states for fiscal health. New Mexico has between 2.01 and 2.60 times the cash needed to cover short-term obligations. Revenues only cover 96 percent of expenses, with a worsening net position of –$490 per capita. In the long run, New Mexico has a net asset ratio of 0.5. Long-term liabilities are lower than the national average, at 23 percent of total assets, or $3,977 per capita. Total unfunded pension liabilities that are guaranteed to be paid are $64.64 billion, or 80 percent of state personal income. OPEB are $3.81 billion, or 5 percent of state personal income.Share this

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. (New Mexico ranks 21st.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (New Mexico ranks 43rd.)
  • 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? (New Mexico ranks 14th.)
  • 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? (New Mexico ranks 50th.)
  • 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? (New Mexico ranks 49th.)

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

To read all our work on New Mexico, go to mercatus.org/states/new-mexico.