The Best and Worst Run States in America: A Survey of All 50

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Tallahassee, Florida

21. Florida
> Debt per capita: $1,793 (9th lowest)
> 2015 Unemployment rate: 5.4% (tied-22nd highest)
> Credit rating: Aa1/AAA
> Poverty: 15.7% (16th highest)

Florida’s population has grown by 6.2% from migration over the last half decade, the largest such growth of all states after only North Dakota. People often move for work, but Florida’s job market is not a likely explanation for the population surge. Rather, population growth is likely due to retirees relocating. The state’s 5.4% annual unemployment rate is slightly worse than the corresponding 5.3% national figure. For many who cannot find work, unemployment insurance benefits are not adequate. Only one in 10 unemployed Floridians receive UI benefits, the smallest share of any state. Additionally, nearly half of those receiving UI benefits exhaust them, nearly the highest share in the country.

Florida’s housing market also faces serious challenges. Hit especially hard by the housing crisis, about 1 in every 56 Florida homes were in foreclosure last year, nearly the largest share in the country.

Maryland

22. Maryland
> Debt per capita: $4,392 (13th highest)
> 2015 Unemployment rate: 5.2% (tied-25th highest)
> Credit rating: Aaa/AAA
> Poverty: 9.7% (2nd lowest)

Median household income in Maryland is $75,847 a year, more than $20,000 above the typical American household income and the highest among all states. Also, as is often the case in high-income states, Maryland’s poverty rate is low, with just 9.7% of the population living below the poverty line. Unlike many affluent states, Maryland has not leveraged its wealthy tax base into a balanced budget. Among the factors dragging down the state’s rank is the relatively high state debt as well as one of the highest foreclosure rates in the United States. Maryland’s debt amounts to 59.0% of the state’s annual budget, and an estimated 1 in every 62 houses in the state are in foreclosure, more than double the national foreclosure rate.

Raleigh, North Carolina

23. North Carolina
> Debt per capita: $1,778 (8th lowest)
> 2015 Unemployment rate: 5.7% (tied-17th highest)
> Credit rating: Aaa/AAA
> Poverty: 16.4% (12th highest)

The North Carolina pension system is 99.3% funded, the fourth best-met obligation of any state pension program. According to a research report by the right-leaning think tank Mercatus Center of George Mason University, the growing cost of health care in North Carolina may lead to a major shortfall. Researchers found that the cost of Medicaid in North Carolina has tripled since 1970, outpacing the nation as a whole and now comprising more than one-third of the state budget.

An estimated 4.9% of the North Carolina labor force was out of work in October, in line with the average unemployment rate nationwide. As unemployment has declined in recent years, the state has reduced benefits for those out of work. Just 12% of unemployed workers in North Carolina receive unemployment insurance, for example, the smallest share of any state other than Florida.

Carson City, Nevada

24. Nevada
> Debt per capita: $1,218 (3rd lowest)
> 2015 Unemployment rate: 6.7% (tied-the highest)
> Credit rating: Aa2/AA
> Poverty: 14.7% (23rd highest)

Nevada’s rank on this list has improved dramatically in just a few years. In the 2013 edition, the state ranked 5th worst. This year, the state ranks 24th overall. The improvement is in part due to a rebound in the state’s housing market over the last few years. After falling by more than 50% from 2007 to 2012, the state’s median home value surged by about 40% in the last five years, the second largest increase during that time.

One of the reasons the state ranks about in the middle of this list is its uneven record on budgetary management. On the one hand, the state has among the lowest government debt, at 18.5% of revenue in fiscal 2014. On the other hand, as of the current fiscal year, the state has set no funds aside for economic hardship, one of just six states with no rainy day fund.

Lansing, Michigan

25. Michigan
> Debt per capita: $3,177 (24th lowest)
> 2015 Unemployment rate: 5.4% (tied-22nd highest)
> Credit rating: Aa1/AA-
> Poverty: 15.8% (15th highest)

Although Michigan ranks only in the middle of this list, it has improved dramatically from just a few years ago, when it ranked third worst. The better rank is at least partially due to a relative improvement in the state’s housing market. Between 2007 and 2012, the state’s median home value fell by nearly 25%. Over the last five years, it is up by 16.4%, a larger increase than in most states. One criticism of Michigan’s government relates to oversight and handling of corruption. The Center for the Advancement of Public Integrity rated Michigan’s corruption problems worst of any state.

The state also has a history of budget problems. Michigan, with a AA- debt rating from S&P, is one of just nine states to receive less than a AA credit rating. Based on recent state budgets, however, Michigan’s finances are showing some positive signs. The state had an unexpected surplus of more than $570 million this year, due in part to higher than anticipated tax revenues. Michigan’s rainy day fund amounts to 6.3% of the state’s current budget, better than more than 30 states.