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On the basis of its fiscal solvency in five separate categories, California ranks 44th among the US states and Puerto Rico for its fiscal health. California’s fiscal performance is weak across several categories. The state has between 0.67 and 1.44 times the cash needed to cover short-term liabilities. Revenues exceed expenses by 4 percent, producing a surplus of $250 per capita, but on a long-run basis California is heavily reliant on debt, with a negative net asset ratio of −0.40 and total liabilities amounting to 73 percent of total assets. Total debt is $118.17 billion. When valued on a guaranteed-to-be-paid basis, total unfunded pension liabilities are $756.67 billion, and other postemployment benefits (OPEB) are $29.05 billion. These three liabilities are equal to 46 percent of total state personal income. 

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. (California ranks 47th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (California 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? (California ranks 46th.)
  • 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? (California ranks 28th.)
  • Trust fund solvency measures how much debt a state has. How large are unfunded pension liabilities, OPEB liabilities, and state debt compared to the state personal income? (California ranks 42nd.)

For a complete explanation of the methodology used to calculate California's fiscal health rankings, download the full paper and the dataset at