West Virginia

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, West Virginia ranks 40th among the US states and Puerto Rico for its fiscal health. On a cash basis, West Virginia has between 1.50 and 2.02 times the cash needed to cover short-term liabilities. Revenues exceed expenses by 2 percent, for a surplus of $131 per capita. Net assets are 12 percent of total assets, and total liabilities are 23 percent of total assets. Total debt is $2.07 billion. Unfunded pension liabilities are $19.82 billion on a guaranteed-to-be-paid basis, and other postemployment benefits (OPEB) are $2.73 billion. These three liabilities are equal to 37 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. (West Virginia ranks 32nd.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (West Virginia ranks 32nd.)
  • 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? (West Virginia ranks 28th.)
  • 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? (West Virginia ranks 45th.)
  • 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? (West Virginia ranks 30th.) 

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