July 11, 2017

#11 | Ranking the States by Fiscal Condition: Missouri

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Summary

On the basis of its fiscal solvency in five separate categories, Missouri ranks 11th among the US states for its fiscal health. On a short-run basis, Missouri has between 2.63 and 5.22 times the cash needed to cover short-term obligations. Missouri’s budget solvency was significantly improved over the previous year. Revenues exceeded expenses by 5 percent, and net position improved by $211 per capita in FY 2015. On a long-run basis, Missouri has a net asset ratio of −0.02, and long-term liabilities are 27 percent of total assets, or $1,816 lower than the average in the states of $4,272. Total primary government debt is low at $3.63 billion, or 1.4 percent of state personal income. Unfunded pension obligations, on a guaranteed-to-be-paid basis, are $90.61 billion, or 35 percent of personal income. OPEB is 1 percent of 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. (Missouri ranks 13th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Missouri ranks 20th.)
  • 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? (Missouri ranks 15th.)
  • 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? (Missouri ranks 7th.)
  • 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? (Missouri ranks 31st.)

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

To read all our work on Missouri, go to mercatus.org/states/missouri.