July 11, 2017

#25 | Ranking the States by Fiscal Condition: New Hampshire

Summary

On the basis of its fiscal solvency in five separate categories, New Hampshire is ranked 25th among the US states for its fiscal health. On a short-run basis, New Hampshire’s position is weak. The state has between 62 percent and 251 percent of the cash needed to cover short-term obligations. Revenues exceed expenses by 1 percent, and net position improved by $47 per capita in FY 2015. New Hampshire’s long-run position is stronger. On a long-run basis, New Hampshire has a net asset ratio of −0.09. Long-term liabilities are 54 percent of state personal income. Total primary government debt is $1.61 billion, or $1,213 per capita. New Hampshire’s best rankings were for service-level solvency, where New Hampshire ranks 1st, and for trust fund solvency, where the state ranks 10th. Unfunded pension obligations, on a guaranteed-to-be-paid basis, are $16.8 billion, or 23 percent of state personal income. OPEB is 3 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. (New Hampshire ranks 40th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (New Hampshire ranks 41st.)
  • 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? (New Hampshire ranks 32nd.)
  • 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? (New Hampshire ranks 1st.)
  • 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? (New Hampshire ranks 10th.)

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

To read all our work on New Hampshire, go to mercatus.org/states/newhampshire.