Maine

Contact us
To speak with a scholar or learn more on this topic, visit our contact page.

Summary

On the basis of its fiscal solvency in five separate categories, Maine ranks 43rd among the US states and Puerto Rico for its fiscal health. On a cash basis, Maine has between 0.46 and 1.74 times the cash needed to cover short-term liabilities. Revenues cover nearly 100 percent of expenses, producing a deficit of $20 per capita. On a long-run basis, net assets are 3 percent of total assets, and total liabilities are 24 percent of total assets. Total debt is $1.20 billion. Unfunded pension liabilities are $14.25 billion on a guaranteed-to-be-paid basis, and other postemployment benefits (OPEB) add $95 million to total unfunded liabilities. These three liabilities are equal to 28 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. (Maine ranks 44th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Maine ranks 40th.)
  • 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? (Maine ranks 20th.)
  • 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? (Maine ranks 36th.)
  • 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? (Maine ranks 24th.)

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