South Dakota

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Summary

On the basis of its fiscal solvency in five separate categories, South Dakota ranks fifth among the US states and Puerto Rico for its fiscal health. On a cash basis, South Dakota has between 5.82 and 8.19 times the cash needed to cover short-term liabilities. Revenues exceed expenses by 9 percent, for a surplus of $408 per capita. Net assets are 32 percent of total assets, and total liabilities are 9 percent of total assets. Total debt is $486 million. Unfunded pension liabilities are $7.70 billion. These two liabilities are equal to 21 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. (South Dakota ranks 2nd.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (South Dakota ranks 9th.)
  • 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? (South Dakota ranks 6th.)
  • 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? (South Dakota ranks 4th.)
  • 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? (South Dakota ranks 9th.)

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