Atlas State of the States’ Financials - 2014


Chicago IL, September 30, 2015
Muni Atlas Research, Inc. ("Atlas") today released its first financial statements review on all 50 US states, including Washington, DC and Puerto Rico for fiscal year 2014.
Most US states have their fiscal year-end dates in June, however five states (see below) use different year-end dates. For comparison purposes, we have selected the financial statements ending within the same year.
March: New York
August: Texas
September: Alabama, Michigan and Washington, DC
Financial statement data are collected from state governments’ official Comprehensive Annual Financial Report (CAFR). Demographic data are collected through the US Census Bureau as of December, 2014. As of the time of this research report, Puerto Rico has not reported its latest CAFR, so Atlas uses its 2013 financial statement data instead.
Atlas looked at 3 key statistics:(1) financial leverage, (2) expense/revenue ratio, and (3) Long term state debt per household. The US Commonwealth of Puerto Rico stands out as being by far the worst compared with any other state in the US.
Puerto Rico comes in with a whopping financial leverageratio of 389.89%. This means that for every $1 in assets the Commonwealth government has almost $4 in liabilities.Four other states in the US have more liabilities than assets: New Jersey (225.30%), Illinois (185.47%), Massachusetts (185.30%), and Connecticut (151.45%).
In terms of government total expenses versus total revenues, the number is also not pretty for Puerto Rico. The Commonwealth’s expense/revenue ratio tops the list at 130.75%, which means that the government spent over 30% more money than it made. The states of Connecticut and New Jersey follow closest at about 106%. Nine other states also spent more than they made: Massachusetts and Louisiana at about 104%; Delaware, Maryland and Kentucky at about 102%; Hawaii, Pennsylvania and Illinois at about 101%; and Maine at100.36%. The remaining states covered their expenses with incoming revenues.
Atlas also looked at the long-term debt picture of all state governments expressed in terms of the amount per household. Puerto Rico "wins" this measurement as wellwith per-household commonwealth long-term debt of $47,167. It isfollowed by Washington, DC ($38,801), New Jersey ($26,044), Hawaii ($25,817), Connecticut ($24,079) and Washington State ($21,277).
The debt picture for Puerto Rico becomes even more risky when expressed in payback terms. Given Puerto Rico’s median household income of $19,515, it would take each household about 29 months, without spending a penny elsewhere, to help the Commonwealth government pay back its long-term debt of $47,167. Washington DC’s number is 7.1 months, which is still sizeable, but only one-quarter of the payback time of Puerto Rico’s.
While Puerto Rico is obviously in financial turbulence, several other states like New Jersey, Illinois, Massachusetts and Connecticut arehighly leveraged and spending more money than they make. Atlas will keep a close look at their financials in the next several years to see whether they will turn this trend around.
About Atlas: As part of our complete Municipal data offering, Atlas collects financial statements for thousands of local governments, with unique insights and over 10 years of history. This report only includes a few metrics. To request the full report, or for other Muni data needs, please contact us.
Atlas: Muni Investment Research Specialist