Special Report

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

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. That year, nearly 10% of North Dakota’s total GDP was generated by the mining sector — which includes crude petroleum and natural gas extraction — more than five times the national rate. The state continued to have the nation’s lowest unemployment rate, at just 3.1% last year. Because of economic prosperity and the availability of jobs, North Dakota’s population grew the most in the country between 2010 and 2012, increasing by 3.7%. This may partly explain recent spikes in property values. Home values in North Dakota skyrocketed 33.4% between 2007 and 2012, by far the largest increase nationally.

2. Wyoming
> 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. Together, these factors may have contributed to the state’s healthy economy, which featured low unemployment and foreclosure rates as of 2012. The state’s population is also well-educated. Nearly 92% of adults over 25 years old had a high school diploma last year, better than all but a handful of states. Despite the many positive factors, the state’s GDP growth was weak last year, growing at just 0.2%.

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3. Iowa
> 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)

Agriculture and related industries accounted for 6.7% of Iowa’s GDP last year, six times the national rate. Like many well-run states, it has a perfect credit rating from both Standard & Poor’s and Moody’s. Additionally, while home values across the nation fell by more than 10% between 2007 and 2012, in Iowa they increased considerably — by 7.1% — over that time. Also, Iowa’s unemployment rate and underemployment rate — which includes the unemployed, discouraged workers, and those who work but want to work more — were both among the lowest in the nation last year, at 5.2% and 10%, respectively. Iowa’s budget shortfall in fiscal 2012 was under 3%, one of the smallest budget gaps in the country.

4. Nebraska
> 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)

Nebraska received strong scores for its fiscal management, with a perfect credit rating from Standard & Poor’s and extremely low debt as of fiscal 2011. The state’s pension plans were well-funded relative to most other states. Nebraska also faced a total budget shortfall of just 4.8% in fiscal 2012, one of the smaller deficits in the country. Nebraska’s unemployment rate was just 3.9% last year, less than any other state except for North Dakota. The Cornhusker State also had an underemployment rate of just 8.8%, the third lowest in the country. Nebraska also performed well in several measures that reflect quality of life. The state’s violent crime and poverty rates were lower than the national rates in 2012, while a higher percentage of residents had health insurance, and a high proportion of adults were high school graduates.

5. Utah
> 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)

By several measures, Utah had one of the stronger economies in the country in 2012. The state ranked fifth in exports per capita, and GDP growth was among the highest. The unemployment rate was just 5.7%, compared to a national rate of 8.1%. According to the Tax Foundation, Utah has one of the most business-friendly tax policies in the country. The state’s residents also have a relatively good quality of life. The state was among America’s safest last year, with just 205.8 violent crimes per 100,000 residents. Educational attainment was also strong, with 91% of residents over the age of 25 holding a high school diploma. The state received the top credit rating from both Standard & Poor’s and Moody’s, with the latter reasoning that Utah has responsible fiscal management and strong economic fundamentals.

6. Vermont
> Debt per capita: $5,566 (10th highest)
> Budget deficit: 14.2% (17th largest)
> Unemployment: 5.0% (4th lowest)
> Median household income: $52,977 (20th highest)
> Pct. below poverty line: 11.8% (10th lowest)

Vermont residents generally have a high quality of life, with very low crime and poverty rates last year. Despite a fairly high level of debt distributed across a small population as of fiscal 2011, the state’s credit rating is relatively strong. Vermont also had among the highest proportion of adults with a high school diploma in the nation last year. This may be due in part to the amount the state invests in education — Vermont spent $3,708 per capita on education in fiscal 2011, the most in the country. Education spending accounted for 40% of the state’s total expenditure that year, among the highest nationally. In 2011, the state passed Green Mountain Care, the first single-payer health care system in the U.S. The state plans to make the transition to the new system in 2017. Vermont already had the second-highest proportion of state residents covered by health insurance in 2012.

7. Minnesota
> Debt per capita: $2,421 (14th lowest)
> Budget deficit: 22.4% (6th largest)
> Unemployment: 5.6% (9th lowest)
> Median household income: $58,906 (9th highest)
> Pct. below poverty line: 11.4% (7th lowest)

Minnesota received top marks in a number of areas. More than 92% of Minnesota adults 25 and older were high school graduates as of 2012, the second-highest percentage in the nation. Additionally, just 8% of residents lacked health care coverage, trailing only three other states. The state’s poverty and violent crime rates were also among the nation’s lowest. The state’s economy was strong, as well, with a GDP growth rate of 3.5% in 2012, an unemployment rate of just 5.6%, and a median income of nearly $59,000, all of which were among the best in the nation. However, Minnesota receives low marks for its burdensome business tax climate, due in part to the state’s retroactive income tax hike on top earners. It also had one of the nation’s largest budget shortfalls for the 2012 fiscal year.

8. Alaska
> Debt per capita: $8,933 (2nd highest)
> Budget deficit: 15.9% (15th largest)
> Unemployment: 7.0% (22nd lowest)
> Median household income: $67,712 (3rd highest)
> Pct. below poverty line: 10.1% (2nd lowest)

As with several other highly ranked states, Alaska benefits from its massive natural resources. While mining, including oil and natural gas extraction, accounted for just 1.8% of the national GDP, these industries accounted for 21.3% of Alaska’s output, higher than any state but Wyoming. Taxes on the oil industry are one of the major factors in the state’s astronomical annual revenue — an estimated $20,646 per capita in fiscal 2011 — by far the most in the country. Alaska was one of just a handful of states to have no deficit for its 2012 budget. It also had the second-lowest poverty rate in the country, partly because permanent residents are entitled to a substantial oil revenue dividend. However, Alaska is not without shortcomings. Residents were among the most likely in the country to be without health insurance, and the state had the third-highest violent crime rate.

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9. South Dakota
> Debt per capita: $4,321 (14th highest)
> Budget deficit: 11.0% (24th largest)
> Unemployment: 4.4% (3rd lowest)
> Median household income: $48,362 (22nd lowest)
> Pct. below poverty line: 13.4% (18th lowest)

South Dakota has not experienced the same oil boom as North Dakota, and it effectively had flat GDP growth last year versus a 13.4% increase for its neighbor. Agriculture accounted for more than 10% of South Dakota’s total GDP in 2012, the most of any state in the nation. Last year, output from agriculture and related industries actually shrank, reducing total GDP growth by 2 percentage points. Despite this, the state’s economy is extremely strong by many measures. The median home value rose by 13.1% between 2007 and 2012, and just one in every 410 homes was in foreclosure last year, both among the best in the country. Also, the state’s 2012 unemployment rate was just 4.4%, better than all but two other states.

10. Texas
> Debt per capita: $1,513 (5th lowest)
> Budget deficit: 20.4% (7th largest)
> Unemployment: 6.8% (tied-17th lowest)
> Median household income: $50,740 (24th highest)
> Pct. below poverty line: 17.9% (tied-11th highest)

Texas’ GDP rose by 4.8% last year, the second-largest increase in the country, behind only North Dakota. Part of this growth came from the state’s robust energy sector. While Texas is the nation’s largest energy producer in the country by a wide margin, it also has a more balanced economy than other major oil and gas-producing states. The state exported more than $10,000 per capita in goods last year, the third most in the nation. Even with its relatively large economy — the state is in the top 15 for GDP per capita — Texas collected less revenue per resident than any other state. Texas also spent less per capita than most states, particularly on public welfare. The state has a perfect credit rating from both Standard & Poor’s and Moody’s, and had just $1,513 per capita in debt in fiscal 2011. Two negatives stand out for the state: Texas had the lowest rate of adults with a high school diploma, as well as the highest percentage of residents without health insurance coverage.

Click here to see the Worst States in America

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