Special Report

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

Des Moines, Iowa
Source: Thinkstock

6. Iowa
> Debt per capita: $2,031 (11th lowest)
> 2015 Unemployment rate: 3.7% (tied-7th lowest)
> Credit rating: Aaa/AAA
> Poverty: 12.2% (tied-16th lowest)

Based on its reserves and debt levels, Iowa has some of the best fiscal management in the country. The state’s rainy day fund is equal to 10% of total expenditures, more than in a majority of states. Additionally, Iowa’s debt per capita of just $2,031 is approximately $1,500 less than the national average across all states.

Iowa has a healthy economy and provides generous benefits for the unemployed. Just 3.7% of the state’s workforce was unemployed in 2015, one of the lowest annual jobless rates in the country. The average unemployment insurance payment covers 45.2% of wages, the fourth highest replacement rate in the country. Just about one in four unemployment insurance recipients exhaust their allotted benefits before returning to work, far less than in most states.

Austin Capital of Texas
Source: Thinkstock

7. Texas
> Debt per capita: $1,524 (6th lowest)
> 2015 Unemployment rate: 4.5% (18th lowest)
> Credit rating: Aaa/AAA
> Poverty: 15.9% (14th highest)

Over the last half decade, Texas has steadily risen in the ranking of best run states. Ranking 36th in 2010, Texas has climbed quickly over the years and is now ranked seventh.

Rapid population growth is often a bellwether of a well managed state. In the last five years, 1.2 million more people have moved to the Lone Star State than have left, the second largest net migration of any state in the country. The state’s economy accommodated the influx handily. Last year, only 4.5% of the Texas labor force was out of a job, lower than the 5.3% national unemployment rate. The state’s budget also appears well managed and relatively well equipped to weather an economic downturn. It has the highest possible credit rating from Moody’s and S&P. Also, the state has managed to save nearly a fifth of its total expenditures, a larger share of rainy day funds than all but two other states.

Denver, Colorado 3
Source: Thinkstock

8. Colorado
> Debt per capita: $3,103 (22nd lowest)
> 2015 Unemployment rate: 3.9% (10th lowest)
> Credit rating: Aa1/AA
> Poverty: 11.5% (tied-13th lowest)

Over the last five years, Colorado’s population increased by 4.6% from net migration, nearly three times the corresponding national growth rate. Some of the state’s new residents likely relocated there due to favorable job prospects. Just 3.1% of the Colorado labor force was out of work in October, one of the lowest unemployment rates in the country. In addition to the state’s relatively strong job market, the state also provides generous unemployment benefits. The average weekly unemployment check is roughly $400, among the most of any state.

Colorado’s GDP increased by 3.6% in 2015, the fourth most of any state in the country. One reason for the strong economic growth is the state’s legalization of recreational marijuana. The state’s marijuana industry — and its $1 billion in sales last year — generated $135.1 million in taxes, license, and fee revenue for Colorado. Close to one-quarter of the 2015 state marijuana revenue will be spent on school construction projects.

Olympia, Washington
Source: Thinkstock

9. Washington
> Debt per capita: $4,407 (12th highest)
> 2015 Unemployment rate: 5.7% (tied-17th highest)
> Credit rating: Aa1/AA+
> Poverty: 12.2% (tied-16th lowest)

Washington’s population has grown by 3.5% from net migration over the last five years, faster than most other states. One pull factor for Washington’s new residents may be the state’s advanced, growing economy. An estimated 12.5% of the Washington workforce is employed in the high-paying professional, scientific, and management field, one of the larger shares nationwide. Washington also has a large wholesale trade sector, in part bolstered by the state’s proximity to Canada and other partners across the Pacific Ocean. Washington ships $12,043 worth of exports per resident, more than any other state. Washington’s GDP grew by 2.9% in 2015, the eighth most nationwide.

While the the state’s 5% October unemployment rate is higher than in most states, out-of-work Washingtonians receive substantial unemployment benefits. The average weekly unemployment check in Washington is $424, more than in all but three other states.

Oregon State Capitol, Salem
Source: Thinkstock

10. Oregon
> Debt per capita: $3,620 (21st highest)
> 2015 Unemployment rate: 5.7% (tied-17th highest)
> Credit rating: Aa1/AA+
> Poverty: 15.4% (tied-17th highest)

Many Oregon residents benefit from the state’s fast-growing economy. Oregon’s GDP grew 4.1% in 2015, more than any other state nationwide. Many of the best-performing companies in the financial and consumer discretionary industries are headquartered in Oregon, including Nike — the top performing stock in the Dow Jones Industrial Average in 2015.

Oregon also has a well balanced budget. It is one of just three states with a fully funded pension, and its $1 billion reserve fund makes up a larger share of its budget than in most states. However, a funded pension may soon come at the expense of other departments. According to the proposed budget for the 2017-19 fiscal period, a bulk of funding for the pension fund will come from local governments in the state. That, and a planned reduction in federal support for Medicaid, will likely shrink the state’s reserve fund.

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