Good governance involves raising and spending enough to provide for the well-being of the population without risking the state’s long-term stability.
To determine how well the states are run, 24/7 Wall St. reviewed hundreds of data sets from dozens of sources. We looked at each state’s debt, revenue, expenditure, and deficit to determine how well it was managed fiscally. We reviewed taxes, exports, and GDP growth, including a breakdown by sector, to identify how each state was managing its resources. We looked at poverty, income, unemployment, high school graduation, violent crime and foreclosure rates to assess the well-being of the state’s resident.
The best run states have benefited from a lot of oil and natural gas. However, California (50th), Texas (10th) and Alaska (8th) also have a lot of oil and natural gas and have not managed resources as well.
1. North Dakota
> Debt per capita: $3,033 (20th lowest)
> Budget deficit: None
> Unemployment: 3.1% (the lowest)
> Median household income: $53,585 (19th highest)
> Pct. below poverty line: 11.2% (6th lowest)
North Dakota’s economic output has surged in the past few years, with GDP climbing 13.4% in 2012, well above the second-fastest growing state, Texas, whose GDP grew by 4.8% in 2012. The Peace Garden State has continued to reap the benefits of fracking in the oil-rich Bakken Shale formation, which accounted for about 90% of the state’s oil production in 2012.
> Debt per capita: $2,409 (13th lowest)
> Budget deficit: None
> Unemployment: 5.4% (7th lowest)
> Median household income: $54,901 (17th highest)
> Pct. below poverty line: 12.6% (13th lowest)
Wyoming was the nation’s largest producer of coal and the third-largest producer of natural gas in 2011. Mining accounted for 28% of the state’s GDP in 2012. Additionally, the Cowboy State has the nation’s best business tax climate, according to the Tax Foundation, due in part to the lack of corporate or individual income tax.
> Debt per capita: $2,478 (15th lowest)
> Budget deficit: 2.5% (41st largest)
> Unemployment: 5.2% (tied-5th lowest)
> Median household income: $50,957 (23rd highest)
> Pct. below poverty line: 12.7% (14th lowest)
> Debt per capita: $1,277 (2nd lowest)
> Budget deficit: 4.8% (38th largest)
> Unemployment: 3.9% (2nd lowest)
> Median household income: $50,723 (25th highest)
> Pct. below poverty line: 13.0% (16th lowest)
> Debt per capita: $2,577 (17th lowest)
> Budget deficit: 8.2% (32nd largest)
> Unemployment: 5.7% (tied-10th lowest)
> Median household income: $57,049 (13th highest)
> Pct. below poverty line: 12.8% (15th lowest)
> Debt per capita: $2,197 (9th lowest)
> Budget deficit: 18.2% (10th largest)
> Unemployment: 8.3% (16th highest)
> Median household income: $47,826 (21st lowest)
> Pct. below poverty line: 18.7% (8th highest)
Only Nevada suffered more than Arizona from the housing crisis. The state’s median home value fell by more than 36% between 2007 and 2012. More than one in six residents lived in poverty last year, which may help explain the state’s relatively high spending on social programs. Twenty-nine percent of all spending in fiscal 2011 was on public welfare programs, one of the highest proportions in the country. Meanwhile, Arizona’s revenue per state resident was $2,197 in fiscal 2011, among the lowest. Although many of its financials, including debt and pension funding, are better than the average state, Arizona had an 18.2% deficit for fiscal 2012, one of the highest in the country. The state’s credit ratings are among the worst in the country.
> Debt per capita: $1,548 (6th lowest)
> Budget deficit: 37.0% (2nd largest)
> Unemployment: 11.1% (the highest)
> Median household income: $49,760 (24th lowest)
> Pct. below poverty line: 16.4% (19th highest)
Nevada was arguably the hardest hit state during the collapse of the housing bubble. Home values fell by more than 50% between 2007 and 2012, the largest decline in the country. And years after it started, Nevada is still reeling from the housing crisis. The state had one of the highest foreclosure rates in the country last year, at one in every 37 homes. The 2012 unemployment rate of 11.1% was the worst in the country. The state’s violent crime rate of 607.6 incidents for every 100,000 residents was worse than all but one other state. The state also suffers from low health insurance coverage. More than 22% of the population was without health coverage in 2012, worse than any other state except for Texas. This rate may improve in 2013. The state opted to provide its own health insurance exchange site rather than rely on the widely criticized national exchange site, healthcare.gov. According to the Las Vegas Sun, the state’s health care exchange site has been functioning relatively smoothly and hasn’t received the same kind of criticism as the national site.
47. Rhode Island
> Debt per capita: $8,721 (3rd highest)
> Budget deficit: 6.9% (35th largest)
> Unemployment: 10.4% (3rd highest)
> Median household income: $54,554 (18th highest)
> Pct. below poverty line: 13.7% (tied-20th lowest)
Rhode Island had more debt per resident than any other state except for Alaska and Massachusetts as of fiscal 2011.
> Debt per capita: $5,041 (11th highest)
> Budget deficit: 18.5% (9th largest)
> Unemployment: 8.9% (10th highest)
> Median household income: $55,137 (16th highest)
> Pct. below poverty line: 14.7% (tied-24th lowest)
Illinois has the worst credit rating in the U.S., having received the lowest rating of any state from both Standard & Poor’s and Moody’s. Explaining its reasoning, Moody’s pointed to the state’s underfunded pension and ongoing weak fiscal practices such as bill payment delays. Only 40.4% of the state’s pension obligations were funded in 2012, the worst rate in the nation. Illinois also had the fourth-largest debt in the country at the end of fiscal 2011 at nearly $65 billion. The state faced high foreclosure and unemployment rates in 2012, both among the worst in the country.
49. New Mexico
> Debt per capita: $3,914 (21st highest)
> Budget deficit: 8.3% (31st largest)
> Unemployment: 6.9% (tied-19th lowest)
> Median household income: $42,558 (6th lowest)
> Pct. below poverty line: 20.8% (2nd highest)
New Mexico ranked this year as the second worst-run state in the country, scoring better than California by only a small margin. One measure that helped put it above California was its credit rating. Standard & Poor’s rates the state AA+, and Moody’s gives it a perfect Aaa rating. The state’s debt load relative to its size was average, and its budget shortfall of 8.3% for going into fiscal 2012 was better than many states. Outside of fiscal management, however, New Mexico performed poorly in several areas in several areas. The state was among the worst 10 nationwide for violent crime, high school graduation rates among adults, and health insurance coverage. More than one in five residents lived below the poverty line in 2012, worse than all states but Mississippi. Last year, state GDP grew by just 0.2%, worse than all but a handful of states.
> Debt per capita: $3,990 (20th highest)
> Budget deficit: 27.8% (3rd largest)
> Unemployment: 10.5% (2nd highest)
> Median household income: $58,328 (11th highest)
> Pct. below poverty line: 17.0% (18th highest)
For the third year in a row, California is the worst-run state in America. California faced a nearly $24 billion in budget shortfall in fiscal 2012, including a mid-year shortfall of $930 million and $8.2 billion carried over from the year before. California carries an A credit rating from Standard & Poor’s, and an A1 from Moody’s — both worse than any other state except for Illinois. Explaining its rating, Moody’s pointed to the state’s history of one-time solutions to resolve its budgetary gaps. It also noted the state’s “highly volatile revenue structure,” due to its over reliance on wealthy taxpayers. The Golden State was also among the worst states in the nation for educational attainment, health coverage, and unemployment.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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