July 11, 2017

#14 | Ranking the States by Fiscal Condition: Nevada

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Summary

On the basis of its fiscal solvency in five separate categories, Nevada is ranked 14th among the US states for its fiscal health. On a short-run basis, Nevada has between 1.98 and 3.39 times the cash needed to cover short-term obligations. Revenues exceed expenses by 6 percent, and net position improved by $204 per capita in FY 2015. On a long-run basis, Nevada’s net asset ratio is −0.04. Long-term liabilities are 47 percent of total assets, or $1,967 per capita. Total primary government debt is $3.51 billion, or 2.9 percent of state personal income, lower than the average in the states. Nevada’s trust fund solvency is ranked among the lowest in the country. Unfunded pension obligations, on a guaranteed-to-be-paid basis, are $65.87 billion, or 54 percent of state personal income. OPEB is 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. (Nevada ranks 19th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Nevada ranks 17th.)
  • 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? (Nevada ranks 25th.)
  • 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? (Nevada ranks 2nd.)
  • 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? (Nevada ranks 45th.)

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

To read all our work on Nevada, go to mercatus.org/states/nevada.