Wyoming has healthiest state budget, report concludes

By: - September 29, 2011 12:00 am

Mineral-rich states, often those with tiny populations, have had the strongest state budgets in the nation over the last decade, according to a new study from a Virginia-based budget research and advocacy organization.

Wyoming, North Dakota, West Virginia, Texas and Alaska had the largest “total funds surpluses” during the 2000s, the study by State Budget Solutions concludes . By contrast, the states with the biggest “total funds deficits” during that time were Wisconsin, Oregon, Ohio, Hawaii and California.

Unlike many analyses of state budgets, the study examines not only general-fund revenues and spending over a short time, but overall state collections and expenditures — including pension liabilities — over 10 years. It argues forcefully against evaluating states’ fiscal health by examining only general funds.

“Looking at the general fund to measure the entire state budget is the equivalent of looking at a household’s monthly budget and gauging the level of responsible spending by considering the allocation of funds and expenditure of the utilities budget while ignoring the money used for groceries, gas, insurance, etc.,” the analysis says. “It’s not necessary to be a budget analyst to see that this practice flies in the face of common sense.”

The study cites as an example Montana, where general-fund spending is about ,000 per capita but overall spending is ,000 per capita.

While most states are statutorily or constitutionally obligated to balance their budgets each year, the study notes that many of them do so by postponing longer-term obligations, putting pressure on their “total funds” balance sheets in the process. States “engage in accounting tricks and budget gimmicks to shift money out of other funds into the general fund,” it says. “These budgetary gimmicks and games leave the rest of the state budget in disarray.”

For an explanation of how states commonly use accounting maneuvers and other tricks to balance their yearly budgets, see Stateline ‘s explainer, ” Budget gimmicks explained: five ways states hide deficits “.

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