Montana

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Summary

On the basis of its fiscal solvency in five separate categories, Montana ranks 10th among the US states and Puerto Rico for its fiscal health. On a cash basis, Montana has between 4.31 and 5.67 times the cash needed to cover short-term liabilities. Revenues exceed expenses by 8 percent, producing a surplus of $409 per capita. On a long-run basis, net assets are 36 percent of total assets, and total liabilities are 9 percent of total assets. Total debt is $266 million. Unfunded pension liabilities are $15.61 billion on a guaranteed-to-be-paid basis, and other postemployment benefits (OPEB) add $466 million. These three liabilities are equal to 40 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. (Montana ranks 7th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Montana ranks 10th.)
  • 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? (Montana ranks 8th.)
  • 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? (Montana ranks 32nd.)
  • 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? (Montana ranks 38th.)

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