#40 | Ranking the States by Fiscal Condition: Rhode Island

Summary

On the basis of its solvency in five separate categories, Rhode Island ranks 40th among the US states for fiscal health. Rhode Island has between 1.13 and 2.02 times the cash needed to cover short-term obligations. Revenues exceed expenses by 3 percent, with an improving net position of $225 per capita. In the long run, Rhode Island’s negative net asset ratio of 0.49 points to the use of debt and unfunded obligations. Long-term liabilities are higher than the national average, at 90 percent of total assets, or $5,717 per capita. Total unfunded pension liabilities that are guaranteed to be paid are $21.69 billion, or 40 percent of state personal income. OPEB are $0.64 billion, or 1 percent of 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. (Rhode Island ranks 37th.)
• Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Rhode Island ranks 21st.)
• 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? (Rhode Island ranks 43rd.)
• 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? (Rhode Island ranks 39th.)
• 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? (Rhode Island ranks 27th.)

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

To read all our work on Rhode Island, go to mercatus.org/states/rhode-island.