July 11, 2017

#3 | Ranking the States by Fiscal Condition: South Dakota

Summary

On the basis of its fiscal solvency in five separate categories, South Dakota is ranked 3rd among the US states for its fiscal health. South Dakota’s fiscal rankings are high in all categories. On short-run basis, South Dakota has between 6.14 and 8.51 times the cash needed to cover short-term liabilities. Revenues exceed expenses by 4 percent, and net position improved by $647 per capita in FY 2015. On a long-run basis, net assets are 34 percent of total assets after debts have been paid. Long-term liabilities are 10 percent of total assets, or $803 per capita. Total primary government debt is $560 million, or 1.4 percent of state income. Unfunded pension obligations, on a guaranteed-to-be-paid basis, are $9.8 billion, or 25 percent of personal income. 

Share this

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. (South Dakota ranks 4th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (South Dakota ranks 11th.)
  • 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? (South Dakota ranks 4th.)
  • 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? (South Dakota ranks 5th.)
  • 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? (South Dakota ranks 12th.)

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

To read all our work on South Dakota, go to mercatus.org/states/southdakota.