The Best and Worst Run States in America: A Survey of All 50
> Debt per capita: $1,891 (7th lowest)
> Budget deficit: 15.9% (15th largest)
> Unemployment: 7.3% (tied-22nd highest)
> Median household income: $41,574 (4th lowest)
> Pct. below poverty line: 19.0% (7th highest)
Alabama was among the states spending the least on public welfare programs in fiscal 2011, but not because its residents were wealthy. Last year, nearly one in five residents lived below the poverty line. In fiscal 2011, 39% of Alabama’s spending went to education, or $2,277 per resident, among the highest levels nationwide. The percent of adults with a high school diploma or better, however, was one of the worst in 2012. The state’s GDP growth rate was also in the bottom 15 in three of the last four years. Last year, state GDP increased by just 1.2%, less than half the national growth rate. Unemployment in the Birmingham metropolitan area, Alabama’s most populous region, improved considerably between 2011 and 2012, dropping from 7.9% to 6.4%. This mirrored the trend statewide, where unemployment dropped from 8.7% in 2011 to 7.3% in 2012.
> Debt per capita: $8,531 (4th highest)
> Budget deficit: 17.1% (12th largest)
> Unemployment: 8.4% (tied-14th highest)
> Median household income: $67,276 (4th highest)
> Pct. below poverty line: 10.7% (4th lowest)
Connecticut’s economy was the only one in the country to contract in 2012. The state also had the 4th highest debt per capita in fiscal 2011. Moody’s and Standard & Poor’s rate the state’s credit as relatively poor. This may be due to the state’s poorly-funded pension. The state’s pension obligations were less than half funded as of 2012. Connecticut’s crime rate was better than the national rate, although it varied considerably across the state. In Stamford, the violent crime rate was under 300 incidents per every 100,000 people. In New Haven, on the other hand, it was close to 1,500 — among the highest rates for any metro area.
42. South Carolina
> Debt per capita: $3,293 (24th lowest)
> Budget deficit: 11.1% (23rd largest)
> Unemployment: 9.1% (tied-7th highest)
> Median household income: $43,107 (9th lowest)
> Pct. below poverty line: 18.3% (9th highest)
South Carolina ranks poorly in several measures. One in every 60 South Carolina homes were in foreclosure in 2012, and the median household income was just $43,107, both among the worst figures nationwide. The state’s poverty and violent crime rates were also among the highest in the country, and its property crime rate was the highest. South Carolina’s unemployment rate was more than 9% last year, among the worst in the nation. Several of the state’s metropolitan areas, including Myrtle Beach, Sumter, and Florence, had unemployment rates of 10% or greater in 2012. South Carolina is currently pitching Boeing to move jobs there, with Governor Nikki Haley touting her opposition to unions.
43. New Jersey
> Debt per capita: $7,265 (5th highest)
> Budget deficit: 37.5% (the largest)
> Unemployment: 9.5% (tied-4th highest)
> Median household income: $69,667 (2nd highest)
> Pct. below poverty line: 10.8% (5th lowest)
New Jersey’s population is relatively wealthy. The state’s median household income in 2012 was just under $70,000, the second highest in the U.S. Just 10.8% of the population lived below the poverty line that year, among the lowest in the country. Unfortunately, the state ranks poorly by most other measures. While the national job market improved in 2012, New Jersey’s unemployment remained high. Compared to the state’s 2011 unemployment rate of 9.4%, which was 14th worst in the country that year, the 2012 unemployment rate rose to 9.5%, and tied for fourth-worst in the U.S. Also, the state needed to close a deficit of nearly 38% of its total budget in fiscal 2012 — the largest budget gap that year. State debt amounted to $7,265 per resident in fiscal 2011, nearly double the average across all states. New Jersey’s GDP growth has been among the bottom 15 states in each of the past four years.
> Debt per capita: $4,045 (17th highest)
> Budget deficit: 25.1% (4th largest)
> Unemployment: 6.4% (15th lowest)
> Median household income: $42,944 (8th lowest)
> Pct. below poverty line: 19.9% (3rd highest)
While home values nationwide fell by more than 11% between 2007 and 2012, the median Louisiana home value rose by 10% during that time, one of the largest increases nationally. Still, even with a relatively healthy housing market, Louisiana’s population has other serious problems. As of 2012, just 83% of the state’s adults had a high school diploma and more than 16.9% of the state’s population did not have health insurance coverage, both among the worst in the country. There were nearly 500 violent crimes per 100,000 residents in 2012, making the state one of the most dangerous. Nearly under one in every five residents lived below the poverty line, worse than all but two states. The state’s finances are also in bad shape. Just over 55% of the state’s pension obligations were funded in 2012, fourth-worst in the country. And the state had to close a budget gap of more than 25% going into fiscal 2012. The average gap across the states was 15.5% that year.
> 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. Although its budget shortfall was relatively small in fiscal 2012, the state currently faces unplanned expenses and may have to revise its budget, according to The Providence Journal. Moody’s cited the state’s eight consecutive years of budget gaps as part of its justification for its relatively poor credit rating. In an attempt to improve funding levels, the state reformed its pension program in 2011, turning its pensions into hybrids with 401(k)-like features, as well as suspending both cost-of-living adjustments and benefit increases. Still, as of last year, the state had funded just over 58% of its pension obligations, compared to a 72.4% average across all states.
> 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.