"State fiscal condition is multifaceted and difficult to measure," reads the abstract to a working paper published this month by Georgia State University's Sarah Arnett.
However, by measuring and ranking the "cash, budget, long-run and service-level solvency" of every state during fiscal year 2012, Arnett believes it is possible to rank each state in the union according to fiscal condition, and in fact does so in the paper.
"The ongoing challenges to state governments' abilities to meet their financial and service obligations underscore the need for a reliable and strait-forward method to compare states' finances," Arnett argues in the study. "Without such methods of comparison, those inside and outside state government are left to wonder about the emerging trends in state finances and how states compare to each other."
To rank each state, Arnett used data from each state's comprehensive annual financial report for 2012. From the reports, Arnett focused on 11 key indicators, all of which measure in one of four categories:
Cash solvency, which Arnett explains measures a state's ability to "pay its bills."
Budget solvency, which in effect measures the debt to surplus ratio of the state.
Long-run solvency, which measures a state's ability to "pay the cost of doing business."
Service level solvency, which measures a state's ability to pay for "service obligations."
"An important conclusion of this paper is that while rankings inherently have top performers and bottom performers," Arnett explains in the paper's conclusion, "there is a substantial difference in state fiscal conditions." That "substantial difference" according to Arnett, is worth understanding in order to "test the effect of fiscal institutions."
So which states came out on top in Arnett's study? See the list to find out. %3Cimg%20src%3D%22http%3A//beacon.deseretconnect.com/beacon.gif%3Fcid%3D140565%26pid%3D46%22%20/%3E