October 9, 2018

#34 | Ranking the States by Fiscal Condition: Maine

Summary

On the basis of its solvency in five separate categories, Maine ranks 34th among the US states for fiscal health. Maine has between 0.65 and 2.02 times the cash needed to cover short-term obligations. Revenues exceed expenses by 4 percent, with an improving net position of $252 per capita. In the long run, Maine’s negative net asset ratio of 0.21 points to the use of debt and unfunded obligations. Long-term liabilities are lower than the national average, at 56 percent of total assets, or $2,812 per capita. Total unfunded pension liabilities that are guaranteed to be paid are $20.80 billion, or 35 percent of state personal income. OPEB are $1.85 billion, or 3 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. (Maine ranks 43rd.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Maine ranks 16th.)
  • 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? (Maine ranks 35th.)
  • 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? (Maine ranks 33rd.)
  • 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? (Maine ranks 22nd.)

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

To read all our work on Maine, go to mercatus.org/states/maine.