#43 | Ranking the States by Fiscal Condition: West Virginia

Summary

On the basis of its solvency in five separate categories, West Virginia ranks 43rd among the US states for fiscal health. West Virginia has between 1.27 and 1.78 times the cash needed to cover short-term obligations. Revenues exceed expenses by 1 percent, with an improving net position of $89 per capita. In the long run, West Virginia has a net asset ratio of –0.12. Long-term liabilities are lower than the national average, at 43 percent of total assets, or $4,194 per capita. Total unfunded pension liabilities that are guaranteed to be paid are $27.75 billion, or 41 percent of state personal income. OPEB are $3.06 billion, or 4 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. (West Virginia ranks 38th.)
• 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 30th.)
• 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 34th.)
• 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 46th.)
• 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? (West Virginia ranks 29th.)

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.

To read all our work on West Virginia, go to mercatus.org/states/west-virginia.