Rhode Island

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, Rhode Island ranks 37th among the US states and Puerto Rico for its fiscal health. On a cash basis, Rhode Island has between 0.86 and 1.73 times the cash needed to cover short-term liabilities. Revenues exceed expenses by 4 percent, for a surplus of $276 per capita. Rhode Island has a negative net asset ratio of 0.11, and total liabilities are 48 percent of total assets. Total debt is $2.67 billion. Unfunded pension liabilities are $14.97 billion on a guaranteed-to-be paid basis, and other postemployment benefits (OPEB) are $714 million. These three liabilities are equal to 35 percent of 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. (Rhode Island ranks 41st.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Rhode Island ranks 22nd.)
  • 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? (Rhode Island ranks 39th.)
  • 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? (Rhode Island ranks 34th.)
  • 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? (Rhode Island ranks 29th.) 

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