July 11, 2017

#26 | Ranking the States by Fiscal Condition: Washington

Summary

On the basis of its fiscal solvency in five separate categories, Washington is ranked 26th among the US states for its fiscal health. In the short-run, Washington has between 1.73 and 3.59 times the cash needed to cover short-term obligations. Revenues exceed expenses by 1 percent, and net position improved by $42 per capita in FY 2015. On a long-run basis, Washington has no net assets remaining after debts have been met. Long-term liabilities are 68 percent of total assets, or $8,445 per capita, which is nearly two times the average in the states. Total primary government debt is $24.82 billion, or 6.8 percent of state personal income. Unfunded pension obligations are $103.4 billion, or 28 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. (Washington ranks 21st.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (Washington ranks 43rd.)
  • 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? (Washington ranks 38th.)
  • 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? (Washington ranks 28th.)
  • 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? (Washington ranks 22nd.)

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

To read all our work on Washington, go to mercatus.org/states/washington.