[Vision2020] The Best and Worst Run States in America: 16. Idaho
kmmos1 at frontier.com
Thu Dec 3 16:21:00 PST 2015
The Best and Worst Run States in America
> Debt per capita: * $2,232 (13th lowest)
*> Credit rating (S&P/Moody’s): * AA+/Aa1
*> Unemployment rate: * 4.0% (11th lowest)
*> Median household income: * $47,861 (14th lowest)
*> Poverty rate: * 14.8% (25th highest)
According to an annual report on corruption from The Center for Public
Integrity, Idaho earns the second highest marks in the country for its
budgetary process. With responsible budgetary practices, Idaho has
assets on hand to cover 85% of all state pensions. The average pension
funded ratio among all states is 72%, by contrast. Idaho is able to
effectively manage workers’ pensions despite having a much lower than
average annual tax revenue per capita. While the national average per
capita tax revenue is $2,657, Idaho collects on average only $2,190
annually per state resident.
How well run is your state? Assessing a state’s management quality is no
simple task. The current economic climate and standard of living in any
given state are not only the results of recent policy choices and
developments, but may also be dependent on forces outside a state’s
control and, often, decisions made decades ago.
For each of the past six years, 24/7 Wall St. has attempted to answer
this question by surveying various characteristics of each state. To
determine how well states are managed, we examine key financial ratios,
as well as social and economic outcomes. This year, North Dakota is the
best-run state in the country for the fourth consecutive year, while New
Mexico replaced Illinois as the worst-run state.
*Click here to see how your state performs.
There is no comprehensive measure of a state government administration
and how well or poorly it runs the state. Selecting appropriate criteria
to compare the 50 states is difficult because there is so much variation
among them. Some states are rich in natural resources, for example,
while others rely on high-skilled sectors, such as technology and
business services. Some depend disproportionately on one industry, while
economies in other states are more balanced. Further, some states are
more rural, while others are highly urbanized and densely populated.
As a result, policy decisions that may work in one state might not work
in another. For example, while taking on large amounts of debt to fund a
state’s spending is often fiscally irresponsible, wealthier states
arguably benefit from higher debt levels — they can use the extra funds
to pay for public welfare services and are able to pay it back without
Most of the conditions used to determine how well or poorly run a state
is do not tend to fluctuate a great deal from year to year. Measures
such as income, poverty, and violent crime rates do not usually change
meaningfully from year to year. Still, the rank of some states changed
significantly this year. Maine, West Virginia, and Alaska each regressed
by at least 10 spots. Alaska, this year’s 18th-best run state, was
seventh-best last year. Meanwhile, four states improved by nearly 10
spots. Colorado improved from 17th-best to eighth-best.
This year, a number of the best-run states have again benefited from an
abundance of natural resources, although this can often manifest as an
overreliance. North Dakota, Wyoming, and Texas are among the top 10
best-run states, and in all three, the mining industry — which includes
fossil fuel extraction — is a major contributor to state GDP. Due in
large part to the mining sector, North Dakota, Texas and Wyoming led the
nation in real GDP growth in 2014. Alaska has utilized its oil wealth to
build massive state reserves and to pay its residents an annual
dividend. However, the state’s position fell this year largely due to
falling oil prices. Similarly, while North Dakota is the leader again
this year, the mining industry has been subject to wild fluctuations.
While some states’ economic fortunes are closely tied to the rise and
fall of individual industries, which are often outside their control,
each state must make the best of its own situation. Governments, as
stewards of their own economies, need to prepare for the worst,
including the collapse of a vital industry. Good governance is about
balancing tax collection and state expenditure in a way that provides
essential services to residents without sacrificing a state’s long-term
fiscal health. Many of the best-run states in the country set money
aside each year for emergencies. For example, Alaska’s rainy day fund —
reserves set aside to be allocated in the event of unforeseen budget
shortfalls — are equal to 146.4% of its revenue, the highest such
percentage of any state.
While each state is different, states at both ends of the list share
certain characteristics. For example, people living in the worst-run
states tend to have lower standards of living. Violent crime and poverty
rates are typically higher in these states, and the share of the
population with at least a high school diploma tends to be lower than
the national rate.
The worst-run states also tend to have weak fiscal management, reflected
by low pension funding, sparsely padded coffers, and poor credit ratings
from Moody’s Investors Service and Standard & Poor’s (S&P). Illinois,
the second worst-run state in America, received lower ratings than any
other state from both agencies. By contrast, the majority of the 10
best-run states have perfect ratings from both agencies.
Unemployment rates are also relatively low in the nation’s best-run
states. North Dakota, the top-ranked state, has an unemployment rate of
2.8%, the lowest of all states. Six of the 10 best-run states have among
the 10 lowest unemployment rates. Meanwhile, unemployment is much more
prevalent in the worst-run states. Louisiana and New Mexico, both among
the lowest-ranked states, have the nation’s fifth- and second-highest
unemployment rates, at 6.2% and 6.8%, respectively.
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