July 11, 2017

#6 | Ranking the States by Fiscal Condition: Nebraska

Summary

On the basis of its fiscal solvency in five separate categories, Nebraska is ranked 6th among the US states for its fiscal health. On a short-run basis, Nebraska holds between 3.59 and 4.77 times the cash needed to cover short-run obligations. Revenues exceed expenses by 3 percent, and net position improved by $158 per capita in FY 2015. Nebraska’s long-term position is especially favorable. On a long-run basis, net assets are 28 percent of total assets after debts have been paid. Long-term liabilities are 5 percent of total assets, or $379 per capita. Nebraska carries very little debt at $20 million, or $8 per capita. Unfunded pension obligations, on a guaranteed-to-be-paid basis, are $16.21 billion, or 18 percent of state personal income.

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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. (Nebraska ranks 12th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Nebraska ranks 29th.)
  • 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? (Nebraska ranks 1st.)
  • 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? (Nebraska ranks 6th.)
  • 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? (Nebraska ranks 3rd.)

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

To read all our work on Nebraska, go to mercatus.org/states/nebraska.