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On the basis of its fiscal solvency in five separate categories, Louisiana ranks 33rd among the US states and Puerto Rico for its fiscal health. Louisiana has between 1.99 and 3.26 times the cash needed to cover short-term liabilities. Revenues cover 96 percent of expenses, producing a deficit of $216 per capita. On a long-run basis, net assets are 4 percent of total assets, and total liabilities are 44 percent of total assets. Total debt is $12.31 billion. Unfunded pension liabilities are $73.26 billion on a guaranteed-to-be-paid basis, and other postemployment benefits (OPEB) add $5.48 billion to unfunded liabilities. Together 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. (Louisiana 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? (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 36th.)
  • 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, OPEB liabilities, and state debt compared to the state personal income? (Louisiana ranks 41st.) 

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-2016-edition.