Colorado

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Summary

On the basis of its fiscal solvency in five separate categories, Colorado ranks 22nd among the US states and Puerto Rico for its fiscal health. On a cash basis, Colorado has between 1.25 and 2.01 times the cash needed to cover short-term liabilities. Revenues exceed expenses by 5 percent, producing a surplus of $250 per capita. Colorado’s long-term position is strong. Net assets are 27 percent of total assets, and total liabilities are 21 percent of total assets. Total debt is $6.32 billion, and unfunded pension liabilities are $81.05 billion on a guaranteed-to-be-paid basis, with other postemployment benefits (OPEB) adding a further $1.24 billion to total unfunded liabilities. Together, these three liabilities are equal to 33 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. (Colorado ranks 35th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Colorado ranks 19th.)
  • 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? (Colorado 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? (Colorado ranks 8th.)
  • 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? (Colorado ranks 33rd.)

For a complete explanation of the methodology used to calculate Colorado's fiscal health rankings, download the full paper and the dataset at mercatus.org/statefiscalrankings-2016-edition.