July 11, 2017

#7 | Ranking the States by Fiscal Condition: Oklahoma

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On the basis of its fiscal solvency in five separate categories, Oklahoma is ranked 7th among the US states for its fiscal health. On a short-run basis, Oklahoma has between 3.14 and 3.83 times the cash needed to cover short-term obligations. Revenues exceed expenses by 7 percent, and net position improved by $338 per capita in FY 2015. On a long-run basis, net assets are 36 percent of total assets after debts have been paid. Long-term liabilities are 10 percent of total assets, or $610 per capita. Total primary government debt is $2.22 billion, or 1.3 percent of state personal income. Oklahoma’s trust fund solvency is the strongest among the states. Unfunded pension obligations, on a guaranteed-to-be-paid basis, are $48.99 billion, or 28 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. (Oklahoma ranks 15th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Oklahoma ranks 9th.)
  • 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? (Oklahoma ranks 2nd.)
  • 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? (Oklahoma ranks 13th.)
  • 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? (Oklahoma ranks 1st.)

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

To read all our work on Oklahoma, go to mercatus.org/states/oklahoma.