A nationwide study found Hawaii ranks number 43 nationwide as one of the states whose finances are reaching a critical point. The study, which was conducted by the Mercatus Center at George Mason University, considered and weighted a variety of financial indices, including cash solvency, budget solvency, long-run solvency, and service level solvency, in formulating their rankings.
Though the report specifies that the findings reveal a, “snapshot in time,” for the states, the rankings are reflective of general fiscal health and policy—a fact that underlines Hawaii’s spending and budget issues as well as the problem of unfunded liabilities that continue to damage the state economic outlook. Hawaii ranked 24th in cash solvency (whether the state has cash on hand to meet short-term obligations), but was 47th in budget solvency, 40th in long-run solvency (ability to cover long-term obligations), and 42nd in service-level solvency (whether the government has sufficient resources to provide adequate services for residents).
“Again, we see the effect of continual fiscal mismanagement,” states Keli’i Akina, Ph.D., President of Grassroot Institute of Hawaii, the state’s free market think-tank and advocate for greater fiscal responsibility. “Taxpayers and citizens must demand greater accountability from our political leaders or we will see our spending and budget shortfalls continue to damage Hawaii’s economic well-being.”
With the legislature primed to consider new bills related to taxes, spending, and unfunded liabilities, Dr. Akina called on legislators to heed the warnings contained in the Mercatus Center’s State Fiscal Condition Report: “As Hawaii’s legislators begin a new session, we urge them to consider sound fiscal policies which will raise Hawaii out of the ‘Bottom 10’ grouping of states in terms of fiscal condition. Serious and workable measures are needed immediately not only to reduce the State’s unfunded liabilities, but to reverse the trend of borrowing from the future to pay for the past.”
The Mercatus report can be downloaded and read in full at http://mercatus.org/publication/state-fiscal-condition-ranking-50-states.