July 11, 2017

#46 | Ranking the States by Fiscal Condition: Maryland

Summary

On the basis of its fiscal solvency in five separate categories, Maryland is ranked 46th among the US states for its fiscal health. On a short-run basis, Maryland holds between 55 percent and 148 percent of the cash needed to cover short-term obligations. Revenues exceed expenses by 1 percent, and net position improved by $88 per capita in FY 2015. On a long-run basis, Maryland’s net asset ratio is −0.5, pointing to the use of debt or unfunded obligations. Long-term liabilities are 94 percent of total assets or $6,554 per capita, which is higher than the average in the states. Total primary government debt is $17.55 billion, or 5.2 percent of state personal income. On a guaranteed-to-be-paid basis, unfunded pension obligations are $88.41 billion, or 26 percent of personal income. OPEB is 3 percent of personal income, which is better than the average 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. (Maryland ranks 46th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Maryland ranks 39th.)
  • 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? (Maryland ranks 44th.)
  • 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? (Maryland ranks 16th.)
  • 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? (Maryland ranks 14th.)

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

To read all our work on Maryland, go to mercatus.org/states/maryland.