July 11, 2017

#42 | Ranking the States by Fiscal Condition: West Virginia

Summary

On the basis of its fiscal solvency in five separate categories, West Virginia is ranked 42nd among the US states for fiscal health. On a short-run basis, West Virginia has between 1.45 and 1.95 times the cash needed to cover short-term obligations. Revenues exceed expenses by 3 percent, and net position improved by $221 per capita in FY 2015. In the long run, West Virginia’s net asset ratio is −0.13, and long-term liabilities are 43 percent of total assets, or $4,223 per capita. Total primary government debt is $2.08 billion, or 3.1 percent of state personal income. West Virginia has a relatively high level of revenues and expenses as a percent of state personal income. Unfunded pension liabilities, on a guaranteed-to-be-paid basis, are $22.78 billion, or 33 percent of state personal income. OPEB is 4 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. (West Virginia ranks 34th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (West Virginia ranks 28th.)
  • 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? (West Virginia ranks 35th.)
  • 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? (West Virginia ranks 46th.)
  • 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? (West Virginia ranks 29th.)

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

To read all our work on West Virginia, go to mercatus.org/states/westvirginia.