Washington

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Summary

On the basis of its fiscal solvency in five separate categories, Washington ranks 24th among the US states and Puerto Rico for its fiscal health. On a cash basis, Washington has between 1.74 and 3.65 times the cash needed to cover short-term liabilities. Revenues exceed expenses by 4 percent, for a surplus of $258 per capita. On a long-run basis, net assets are 3 percent of total assets, and total liabilities are 66 percent of total assets, for a long-term liability per capita of $7,922. Total debt is $24.14 billion. Unfunded pension liabilities are $81.54 billion on a guaranteed-to-be-paid basis, and other postemployment benefits (OPEB) are $3.71 billion. These liabilities are equal to 31 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. (Washington ranks 18th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Washington ranks 25th.)
  • 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? (Washington ranks 41st.)
  • 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? (Washington ranks 26th.)
  • 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? (Washington ranks 19th.)

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