October 9, 2018

#44 | Ranking the States by Fiscal Condition: Delaware

Summary

On the basis of its solvency in five separate categories, Delaware ranks 44th among the US states for fiscal health. Delaware has between 1.34 and 1.98 times the cash needed to cover short-term obligations. Revenues only cover 96 percent of expenses, with a worsening net position of –$377 per capita. In the long run, Delaware has a net asset ratio of –0.15. Long-term liabilities are higher than the national average in per capita terms at $7,537 per capita, but slightly lower than the national average when measured as a percentage of total assets. Total unfunded pension liabilities that are guaranteed to be paid are $13.75 billion, or 30 percent of state personal income. OPEB are $7.73 billion, or 17 percent of state personal income.Share this

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. (Delaware ranks 33rd.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Delaware ranks 42nd.)
  • 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? (Delaware ranks 40th.)
  • 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? (Delaware ranks 48th.)
  • Trust fund solvency measures how much debt a state has. How large are unfunded pension liabilities and OPEB liabilities compared to the state personal income? (Delaware ranks 11th.)

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

To read all our work on Delaware, go to mercatus.org/states/delaware.