July 11, 2017

#31 | Ranking the States by Fiscal Condition: Delaware

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Summary

On the basis of its fiscal solvency in five separate categories, Delaware is ranked 31st among the US states for its fiscal health, an increase of seven places in its ranking from the previous year. On a short-run basis, Delaware has between 2.30 and 3.36 times the cash needed to cover short-term obligations. Revenues exceed expenses by 1 percent. The state’s net position increased by $58 per capita. On a long-run basis, Delaware has a net asset ratio of −0.14 and long-term liabilities are 58 percent of total assets, resulting in a long-term liability per capita of $7,018. On a guaranteed-to-be-paid basis, unfunded pension liabilities are $10.06 billion, or 22 percent of state personal income, and OPEB is 13 percent of state personal income, which is among the highest in the states.  

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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. (Delaware ranks 18th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Delaware ranks 42nd.)
  • 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? (Delaware ranks 40th.)
  • 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? (Delaware ranks 47th.)
  • 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? (Delaware ranks 9th.)

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

To read all our work on Delaware, go to mercatus.org/states/delaware.