October 9, 2018

#26 | Ranking the States by Fiscal Condition: Wisconsin

Summary

On the basis of its solvency in five separate categories, Wisconsin ranks 26th among the US states for fiscal health. Wisconsin has between 0.89 and 1.76 times the cash needed to cover short-term obligations, well below the US average. Revenues exceed expenses by 4 percent, with an improving net position of $244 per capita. In the long run, a net asset ratio of 0 indicates that Wisconsin does not have any assets remaining after debts have been paid. Long-term liabilities are lower than the national average, at 33 percent of total assets, or $2,589 per capita. Total unfunded pension liabilities that are guaranteed to be paid are $70.63 billion, or 26 percent of state personal income. OPEB are $0.94 billion, or less than 1 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. (Wisconsin ranks 39th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Wisconsin ranks 18th.)
  • 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? (Wisconsin ranks 24th.)
  • 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? (Wisconsin ranks 32nd.)
  • 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? (Wisconsin ranks 6th.)

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

To read all our work on Wisconsin, go to mercatus.org/states/wisconsin.