“With California’s much-delayed release last month, all 50 states now have audited financial reports for fiscal year 2022,” writes Mark Joffe of Cato.
It's not good news for California. Despite having the highest marginal income tax rate in the nation and tough business taxes and fees, the Golden State ranks 43rd in fiscal health.
Mr. Joffe asked John Moorlach of the California Policy Center to calculate each state's “unrestricted net position” (UNP), which is a state's total assets (cash, accounts receivable, buildings, etc.) to its liabilities (accounts payable, debts, etc.). It was measured by subtracting the amount and dividing it by the population. Positive number (Alaska ranks first with his $24,199)
Good; negative numbers (California is minus $5,668) are bad.
“Most of the time, states that are fiscally in the red end up politically in the surplus,” Joffe concluded. “The six states with the most negative unrestricted net positions have Democrats. Deep blue New York and California are also fiscally deficit.”
“But Republican governance does not guarantee fiscal health,” Joffe said. He points out that Texas, which ranks 37th, has a per capita UNP of -$2,590 despite being politically dominated by Republicans. The reason, according to Joffe, is “Texas' significant liability for underfunding public employee retirement benefits, including pensions and retiree health care.”
“Other states that are fiscally and politically deficit include Missouri and South Carolina.”
Professor Moorlach said the findings are a red flag for Californians.
“The UNP says this is a warning light for residents,” Muarak said. “The larger the unrestricted net per capita deficit, the more susceptible the government is to tax increases. And if that rash strategy fails, the agency will run out of fuel and become a candidate for bankruptcy.”
Californians can take some comfort in the fact that seven other states controlled by Democratic majorities fared even worse.
44 Kentucky
45 Delaware
46 Hawaii
47 Massachusetts
48 Illinois
49 Connecticut
50 new jersey
Check out Marc Joffe's interactive national map here.
