Atlas State of the States’ Financials - 2016


Chicago IL, October 6, 2017
Muni Atlas Research, Inc. ("Atlas") today released its financial statements review on all 50 US states and Washington DC for fiscal year 2016.
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 US Census Bureau as of December, 2016. As of the time of this research report, Puerto Rico has not reported either 2015 or 2016 financial statements yet, so Atlas does not include Puerto Rico in this report. The State of Alabama also has not released its official financial statements yet. However, it did release an unaudited financial report. Atlas uses the data from the unaudited financial report for Alabama.
Atlas looked at 3 key statistics:(1) financial leverage, (2) expense/ revenue ratio, and (3) Long term state debt per household.
There is not much change in financial leverage compared to the 2015 Report. New Jersey (314.09%) and Illinois (303.73%) sit at the top. They each have more than 3 times the amount of liabilities versus assets. They are followed by Massachusetts (245.77%), Connecticut (227.24%), Kentucky (141.64%), California (112.16%), Maryland (105.00%), and Rhode Island (104.16%).
In terms of government total expenses versus total revenues, Alaska’s expense/revenue ratio is still the highest at 191.38%. It spent almost twice as much as it made, and it gets worse compared to last year’s 149.38%. New Jersey is in the second place at 112.13%, followed by Illinois (108.52%), Connecticut (108.15%), Wyoming (107.65%), Kansas (106.01%), and Massachusetts (105.75%). Nine other states also spent more than their revenues: Delaware, New Mexico, Oklahoma, Louisiana, Alabama, Kentucky, North Dakota, Nebraska and Indiana.
Atlas also looked at the long-term debt picture of all state governments expressed in terms of the amount per household. New Jersey tops all at $53,082. Connecticut ($46,056) and Washington DC (40,770) are not too far behind at second and third place. Seven other states have per-household state debt over $20,000. These includeHawaii ($39,893), Illinois ($34,278), Massachusetts ($30,770), Alaska ($27,207), Kentucky ($25,866), Washington ($23,862), and Delaware ($20,858).
The State of New Jersey also tops the state debt payback measurement at 8.8 months. It would take each household in New Jersey about 8.8 months, without spending a penny elsewhere, to help the state government pay back its long-term debt. It is followed by Connecticut (7.9 months), Illinois and Kentucky (both at 7.1 months), Washington DC and Hawaii (both at 6.9 months).
Given Puerto Rico is not included in this year’s research report, New Jersey and Illinois are the two states that would benefit from a closer look. Both of them have high financial leverage, and also spent way more money that they made during fiscal year 2016. For the State of Alaska, though its leverage is still relatively low, its expense/revenue ratio has been in a dangerous position two years in a row. Assuming the crude oil price does not turn around anytime soon, this heavily energy-reliant state has to find new revenue sources or cut its expenses dramatically in order to 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