MOORLACH UPDATE — 2018 State Per Capita UNPs — August 22, 2019

Drum roll, please. It is time for my annual State Comprehensive Annual Financial Reports (CAFRs) Ranking Update.

I have been providing this report on an annual basis in my public speeches. Last year I included the per capita listing in my UPDATE (see MOORLACH UPDATE — 2017 State Per Capita UNPs — April 2, 2018). Because five states were late in completing and releasing their June 30, 2017 CAFRs, I used their June 30, 2016 CAFRs to prepare the ranking.

A year later, these five states have since released their June 30, 2017 CAFRs, allowing me to update the 2017 rankings in the listing provided in the first chart below.

What changed in the 2017 rankings? Nevada moved up from 17th place to 14th; Indiana moved up one position; Alabama and New Jersey retained their rankings; and New Mexico dropped 22 positions.

The year ended June 30, 2018 is much different. For this fiscal year, the Government Accounting Standards Board (GASB) requires that Other Post Employment Benefits (OPEBs), like unfunded retiree medical, be reported in the liability section of the balance sheet. Consequently, I decided to wait until all of the CAFRs were issued.

It’s nearly September, some 14 months after the end of the 2017-2018 fiscal year. However, the state of Illinois still has not released its CAFR for the year ended June 30, 2018. All the same, it’s time to project what the CAFR for Illinois may look like. Based on the other 49 states, the trends are easy to see. The result is so astonishing, it’s possibly the reason Illinois is holding back its release.

I have taken Illinois’ June 30, 2017 Unrestricted Net Deficit and added the published amount for this state’s unfunded retiree medical, reportedly $72.6 billion, and reduced it by the $16,484,893,000 of OPEBs reported on last year’s CAFR. This arrives at an estimated Unrestricted Net Position of a negative $217,354,522,000. This makes it the largest in the nation and is based on a reasonable and conservative estimate.

The second chart below is the ranking for all 50 states for the year ended June 30, 2018 (or in that range for states with later year ends).

What are the big takeaways?

1. California is still in the bottom 10 states. But, there is good news. The Golden State moved up one position to 41st place. It has the states of Delaware (which dropped 4 positions) and Vermont (which dropped 3 positions) to thank for that, as the state of Rhode Island moved up three rankings to 40th place. So, our state is still moving up, while standing still, even though its per capita jumped up by $1,106 per resident! That’s more than a 25 percent increase. For contrast purposes, half the states have an overall per capita lower than the one year increase California just incurred!

2. Preeminent “no personal income tax” states, like Texas, Florida and Nevada made significant drops in the rankings, by 17, 6 and 5, respectively.

3. The top 12 states remained in this top percentile.

4. The state of Montana continues its rise, up 10 positions.

I’m also providing a bonus third chart. It shows the Unrestricted Net Positions, in order, from largest to smallest, for June 30, 2018 and June 30, 2017 (or similar year end). Here are some observations:

1. California’s Unrestricted Net Deficit grew by nearly $44 billion!

2. However, Illinois and New Jersey bumped California out of 50th place!

3. The increase to the overall combined net deficit of all 50 states is $336 billion! A dramatic increase of 38 percent, thanks mostly to adding the Other Post Employment Benefits to the balance sheets!

4. The state of North Carolina’s total liabilities rose by more than $6 billion, thus moving the state down 24 positions.

5. The combined four bottom states represent Unrestricted Net Deficits totaling roughly three-quarters of a trillion dollars! This is 62 percent of the sum of the Unrestricted Net Positions of all 50 states.

The long-term neglect by GASB of not requiring the reporting of unfunded promises in full until now has had a massive impact on the balance sheets of municipalities and this year’s state audited financial statements prove it.

Future generations will be facing heavy financial burdens and it behooves current state elected leaders and legislators to begin the difficult task of addressing these liabilities as quickly as possible. Why? Because the next recession will be even more difficult on state budgets than downturns in previous years.

June 30, 2017 Rankings (Revised)

Rank State Population UNP Per Capita
1 Alaska         739,795 $14,558,125,000 $19,679
2 North Dakota         755,393 $5,989,501,438 $7,929
3 Wyoming         579,315 $4,518,975,575 $7,801
4 Idaho     1,716,943 $1,146,468,000 $668
5 Tennessee     6,715,984 $2,736,079,000 $407
6 Oklahoma     3,930,864 $1,484,206,000 $378
7 South Dakota         869,666 $267,296,000 $307
8 Nebraska     1,920,076 $550,525,000 $287
9 Utah     3,101,833 $819,880,000 $264
10 North Carolina   10,273,419 $1,822,821,000 $177
11 Iowa     3,145,711 ($999,603,000) ($318)
12 Washington     7,405,743 ($3,376,575,000) ($456)
13 Georgia   10,429,379 ($5,210,957,000) ($500)
14 Nevada     2,998,039 ($1,580,030,000) ($527)
15 Florida   20,984,400 ($12,401,193,000) ($591)
16 Oregon     4,142,776 ($2,482,259,000) ($599)
17 Virginia     8,470,020 ($5,344,284,000) ($631)
18 South Carolina     5,024,369 ($3,497,642,000) ($696)
19 Arkansas     3,004,279 ($2,160,882,000) ($719)
20 Arizona     7,016,270 ($5,341,848,000) ($761)
21 Indiana     6,666,818 ($5,319,406,000) ($798)
22 Texas   28,304,596 ($25,170,339,000) ($889)
23 Minnesota     5,576,606 ($5,029,153,000) ($902)
24 Ohio   11,658,609 ($10,571,925,000) ($907)
25 Montana     1,050,493 ($971,795,000) ($925)
26 Missouri     6,113,532 ($5,787,207,000) ($947)
27 Michigan     9,962,311 ($9,848,197,000) ($989)
28 Kansas     2,913,123 ($3,205,914,000) ($1,101)
29 New Hampshire     1,342,795 ($1,683,141,000) ($1,253)
30 Maine     1,335,907 ($1,885,023,000) ($1,411)
31 Wisconsin     5,795,483 ($8,361,432,000) ($1,443)
32 Colorado     5,607,154 ($8,359,538,000) ($1,491)
33 New Mexico     2,088,070 ($3,311,311,000) ($1,586)
34 Pennsylvania   12,805,537 ($21,275,848,000) ($1,661)
35 Alabama     4,874,747 ($8,608,527,000) ($1,766)
36 Mississippi     2,984,100 ($6,058,425,000) ($2,030)
37 New York   19,849,399 ($45,599,000,000) ($2,297)
38 West Virginia     1,815,857 ($4,455,964,000) ($2,454)
39 Louisiana     4,684,333 ($11,949,852,000) ($2,551)
40 Vermont         623,657 ($2,263,168,022) ($3,629)
41 Delaware         961,939 ($3,622,572,000) ($3,766)
42 California   39,536,653 ($169,499,683,000) ($4,287)
43 Rhode Island     1,059,639 ($4,581,514,000) ($4,324)
44 Maryland     6,052,177 ($27,010,946,000) ($4,463)
45 Hawaii     1,427,538 ($7,996,567,000) ($5,602)
46 Kentucky     4,454,189 ($40,157,358,000) ($9,016)
47 Massachusetts     6,859,819 ($63,992,915,000) ($9,329)
48 Illinois   12,802,023 ($161,239,415,000) ($12,595)
49 Connecticut     3,588,184 ($52,826,131,000) ($14,722)
50 New Jersey     9,005,644 ($148,863,714,435) ($16,530)

June 30, 2018 Rankings

Rank State Population 2018 UNP Per Cap Change
1 Alaska        737,438 $17,387,310,000 $23,578 0
2 North Dakota        760,077 $7,172,275,944 $9,436 0
3 Wyoming        577,737 $4,237,698,833 $7,335 0
4 Idaho     1,754,208 $1,256,840,000 $716 0
5 Oklahoma     3,943,079 $1,853,248,000 $470 1
6 Tennessee     6,770,010 $2,704,085,000 $399 -1
7 Utah     3,161,105 $1,249,827,000 $395 2
8 South Dakota        882,235 $283,343,000 $321 -1
9 Nebraska     1,929,268 $503,722,000 $261 -1
10 Iowa     3,156,145 ($1,013,268,000) ($321) 1
11 Washington     7,535,591 ($4,163,206,000) ($552) 1
12 North Carolina  10,383,620 ($5,884,784,000) ($567) -2
13 Oregon     4,190,713 ($2,466,140,000) ($588) 3
14 Virginia     8,517,685 ($5,115,028,000) ($601) 3
15 Montana     1,062,305 ($642,952,000) ($605) 10
16 South Carolina     5,084,127 ($3,578,770,000) ($704) 2
17 Indiana     6,691,878 ($5,062,064,000) ($756) 4
18 Arizona     7,171,646 ($5,522,793,000) ($770) 2
19 Nevada     3,034,392 ($2,448,744,000) ($807) -5
20 Georgia  10,519,475 ($8,506,350,000) ($809) -7
21 Florida  21,299,325 ($17,686,725,000) ($830) -6
22 Kansas     2,911,505 ($2,617,412,000) ($899) 6
23 Minnesota     5,611,179 ($5,629,152,000) ($1,003) 0
24 Arkansas     3,013,825 ($3,115,348,000) ($1,034) -5
25 Ohio  11,689,442 ($12,787,140,000) ($1,094) -1
26 Colorado     5,695,564 ($7,251,155,000) ($1,273) 6
27 Missouri     6,126,452 ($7,922,530,000) ($1,293) -1
28 Wisconsin     5,813,568 ($8,542,138,000) ($1,469) 3
29 Michigan     9,995,915 ($14,946,883,000) ($1,495) -2
30 Mississippi     2,986,530 ($5,845,872,000) ($1,957) 6
31 Alabama     4,887,871 ($9,597,426,000) ($1,964) 4
32 New Mexico     2,095,428 ($4,690,920,000) ($2,239) 1
33 West Virginia     1,805,832 ($4,119,293,000) ($2,281) 5
34 New York  19,542,209 ($45,231,000,000) ($2,315) 3
35 New Hampshire     1,356,458 ($3,221,260,000) ($2,375) -6
36 Maine     1,338,404 ($3,491,939,000) ($2,609) -6
37 Pennsylvania  12,807,060 ($42,892,246,000) ($3,349) -3
38 Louisiana     4,659,978 ($16,052,435,000) ($3,445) 1
39 Texas  28,701,845 ($104,638,813,000) ($3,646) -17
40 Rhode Island     1,057,315 ($4,702,373,000) ($4,447) 3
41 California  39,557,045 ($213,316,033,000) ($5,393) 1
42 Maryland     6,042,718 ($34,404,356,000) ($5,694) 2
43 Vermont        626,299 ($3,831,618,339) ($6,118) -3
44 Hawaii     1,420,491 ($11,381,725,000) ($8,013) 1
45 Delaware        967,171 ($8,475,290,000) ($8,763) -4
46 Kentucky     4,468,402 ($42,257,250,000) ($9,457) 0
47 Massachusetts     6,902,149 ($74,254,002,000) ($10,758) 0
48 Illinois  12,741,080 ($217,354,522,000) ($17,059) 0
49 Connecticut     3,572,665 ($61,949,017,000) ($17,340) 0
50 New Jersey     8,908,520 ($214,093,149,142) ($24,032) 0

Unrestricted Net Positions — June 30, 2018 vs 2017

Rank State 2018 UNP State 2017 UNP Change
1 Alaska $17,387,310,000 Alaska $14,558,125,000 0
2 North Dakota $7,172,275,944 North Dakota $5,989,501,438 0
3 Wyoming $4,237,698,833 Wyoming $4,518,975,575 0
4 Tennessee $2,704,085,000 Tennessee $2,736,079,000 0
5 Oklahoma $1,853,248,000 North Carolina $1,822,821,000 -24
6 Idaho $1,256,840,000 Oklahoma $1,484,206,000 1
7 Utah $1,249,827,000 Idaho $1,146,468,000 1
8 Nebraska $503,722,000 Utah $819,880,000 1
9 South Dakota $283,343,000 Nebraska $550,525,000 1
10 Montana ($642,952,000) South Dakota $267,296,000 1
11 Iowa ($1,013,268,000) Montana ($971,795,000) 1
12 Nevada ($2,448,744,000) Iowa ($999,603,000) 1
13 Oregon ($2,466,140,000) Nevada ($1,580,030,000) 1
14 Kansas ($2,617,412,000) New Hampshire ($1,683,141,000) -2
15 Arkansas ($3,115,348,000) Maine ($1,885,023,000) -2
16 New Hampshire ($3,221,260,000) Arkansas ($2,160,882,000) 1
17 Maine ($3,491,939,000) Vermont ($2,263,168,022) -2
18 South Carolina ($3,578,770,000) Oregon ($2,482,259,000) 5
19 Vermont ($3,831,618,339) Kansas ($3,205,914,000) 5
20 West Virginia ($4,119,293,000) New Mexico ($3,311,311,000) -2
21 Washington ($4,163,206,000) Washington ($3,376,575,000) 0
22 New Mexico ($4,690,920,000) South Carolina ($3,497,642,000) 4
23 Rhode Island ($4,702,373,000) Delaware ($3,622,572,000) -9
24 Indiana ($5,062,064,000) West Virginia ($4,455,964,000) 4
25 Virginia ($5,115,028,000) Rhode Island ($4,581,514,000) 2
26 Arizona ($5,522,793,000) Minnesota ($5,029,153,000) -1
27 Minnesota ($5,629,152,000) Georgia ($5,210,957,000) -6
28 Mississippi ($5,845,872,000) Indiana ($5,319,406,000) 4
29 North Carolina ($5,884,784,000) Arizona ($5,341,848,000) 3
30 Colorado ($7,251,155,000) Virginia ($5,344,284,000) 5
31 Missouri ($7,922,530,000) Missouri ($5,787,207,000) 0
32 Delaware ($8,475,290,000) Mississippi ($6,058,425,000) 4
33 Georgia ($8,506,350,000) Hawaii ($7,996,567,000) -3
34 Wisconsin ($8,542,138,000) Colorado ($8,359,538,000) 4
35 Alabama ($9,597,426,000) Wisconsin ($8,361,432,000) 1
36 Hawaii ($11,381,725,000) Alabama ($8,608,527,000) 1
37 Ohio ($12,787,140,000) Michigan ($9,848,197,000) -1
38 Michigan ($14,946,883,000) Ohio ($10,571,925,000) 1
39 Louisiana ($16,052,435,000) Louisiana ($11,949,852,000) 0
40 Florida ($17,686,725,000) Florida ($12,401,193,000) 0
41 Maryland ($34,404,356,000) Pennsylvania ($21,275,848,000) -2
42 Kentucky ($42,257,250,000) Texas ($25,170,339,000) -5
43 Pennsylvania ($42,892,246,000) Maryland ($27,010,946,000) 2
44 New York ($45,231,000,000) Kentucky ($40,157,358,000) 2
45 Connecticut ($61,949,017,000) New York ($45,599,000,000) 1
46 Massachusetts ($74,254,002,000) Connecticut ($52,826,131,000) 1
47 Texas ($104,638,813,000) Massachusetts ($63,992,915,000) 1
48 California ($213,316,033,000) New Jersey ($148,863,714,435) -1
49 New Jersey ($214,093,149,142) Illinois ($161,239,415,000) -1
50 Illinois ($217,354,522,000) California ($169,499,683,000) 2
  Totals ($1,214,054,771,704) ($878,007,376,444)

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