Study: Alabama ranks No. 13 in the nation in state “fiscal health”

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A new study from the Mercatus Center at George Mason University today released an update to their 50-state study of the fiscal soundness and stability of state governments. It lists Alabama as significantly ahead of the pack, ranking No. 13 in the country, just behind neighboring Tennessee at No. 8 but well above other southern states like Georgia, Mississippi and Lousiana who ranked in the bottom half.

Alabama was cited in particular for high marks in fiscal solvency and service-level solvency, measures of cash on hand (No. 8) and whether state services adequately defray state costs when it comes to fees, taxes and licensure (No. 13).

The state was docked, however, for its infamously precarious budget situation. The Center ranked the state No. 36 for its budget solvency criterion, citing a 1.02 operating ratio – meaning that the state carries slightly more obligations than it receives in revenue – and a modest per capita state deficit, at $90 per Alabama taxpayer.

Lawmakers left Montgomery last month without passing a budget, as Gov. Robert Bentley vetoed the Legislature’s FY 2015-2016 spending proposal after the Senate had adjourned, leaving the state in budgetary limbo until it re-convenes for an expected Special Session in August. Its fiscal hopes were lifted last week, however, as the state reached a $2.3 billion settlement with BP over the 2011 Deepwater Horizon oil spill, to be paid out over the next 18 years.

The study noted that Alabama’s long-term pension projections were of concern as well, with some $53 billion in future liabilities currently funded at a 66 percent rate, just under the national 70 percent level.

Overall state debt per capita was listed at $1,309 per Alabamian, far from ideal but considerably better than the national state average of $2,768 in per capita debt.

See the Mecatus Center’s full analysis of Alabama’s fiscal wellbeing here.

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