Special Report

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

Source: Thinkstock

41. West Virginia
> 2016 Unemployment: 6.0% (4th highest)
> Pension funded ratio: 76.9% (20th highest)
> Credit rating and outlook: Aa2/Stable
> Poverty: 17.9% (5th highest)

West Virginia lost nearly 10,000 residents in the 12 months between July 2015 and July 2016, the steepest total population decline of any state other than Illinois. With a smaller tax base, the state’s budget will likely soon be feeling the squeeze. Just as the state struggles financially, many of its residents struggle as well. Some 17.9% of people in West Virginia live in poverty compared to 14.0% of Americans nationwide.

West Virginia is the second largest coal-producing state in the country after Wyoming. Like many other resource-rich states, West Virginia’s economy is overly dependent on resource extraction and is vulnerable to industry downturns. Some 3.7% of West Virginia’s labor force is employed in the resource extraction sector, more than double the industry’s share of total employment nationwide.

Source: Thinkstock

42. Oklahoma
> 2016 Unemployment: 4.9% (20th highest)
> Pension funded ratio: 79.2% (19th highest)
> Credit rating and outlook: Aa2/Negative
> Poverty: 16.3% (9th highest)

Like many resource-rich states, Oklahoma’s revenue from resource extraction took a hit following the global plunge in oil prices in 2014. Falling oil prices compounded the state’s revenue problem that began when Gov. Mary Fallin slashed taxes in an attempt to make the state more business friendly. The state’s school and health care systems have bared the brunt of the diminished tax revenues.

Oklahoma is also one of a minority of states to not take advantage of federal funds to expand Medicaid. Medicaid is intended to help those struggling financially access health care, and many Oklahoma residents are poor. Some 16.3% of state residents live on poverty level income compared to only 14.0% of Americans. Medicaid expansion would likely go a long way to reduce the state’s near nation-leading 13.8% uninsured rate.

Source: Thinkstock

43. Illinois
> 2016 Unemployment: 5.9% (6th highest)
> Pension funded ratio: 40.2% (3rd lowest)
> Credit rating and outlook: Baa3/Negative
> Poverty: 13.0% (24th lowest)

No state has a lower credit rating than Illinois, and for good reason. Decades of budgetary mismanagement left the state unable to pay for many services and pension obligations. After years of stalemate, the state has just passed a $36 billion budget, its first since 2015. Still, the state has some $64.2 billion in outstanding debt and $250 billion in pension obligations as state workers retire, only 40% of which are funded. Due to the state’s ongoing budget woes, Moody’s is threatening to further downgrade Illinois rating. Such a move would make Illinois the first and only state with a junk credit rating.

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44. Rhode Island
> 2016 Unemployment: 5.3% (13th highest)
> Pension funded ratio: 57.1% (6th lowest)
> Credit rating and outlook: Aa2/Stable
> Poverty: 12.8% (22nd lowest)

Like most states in New England, Rhode Island has relatively high per capita tax revenue, but it still borrows heavily. The state collects the equivalent of $3,026 in taxes per resident annually, slightly more than typical. Still, the state is $9.0 billion in debt — or about $8,500 per resident — more than nearly all states’ debt per capita with the exception of its neighbors Connecticut and Massachusetts.

Currently, Rhode Island is facing the prospect of a $29.3 million budget shortfall in in 2017, almost entirely due to high social services spending. Many states have large rainy day funds to cover such budget shortfalls without raising taxes, but not Rhode Island. The state only has 5.2% of its annual spending saved in a rainy day fund, a smaller share than in the vast majority of states.

Source: Thinkstock

45. New Jersey
> 2016 Unemployment: 5.0% (18th highest)
> Pension funded ratio: 37.5% (the lowest)
> Credit rating and outlook: A3/Negative
> Poverty: 10.4% (9th lowest)

Up until January, New Jersey will still led by one of the least popular politicians in the country. Earlier this year, Gov. Chris Christie had a 15% approval rating, the lowest of any governor in state history. Since Christie took office in 2010, New Jersey fell steadily in the ranks on this list from 21st best to 6th worst. The state’s credit rating has also been downgraded several times during Christie’s administration and currently has a negative outlook from Moody’s.

As is the case in many of the worst run states, people are leaving New Jersey. Between July 2015 and July 2016, 16,704 more people moved out of the Garden State then came in, one of the largest population declines attributable to migration in the country. The dwindling tax base will do little to help the state’s budgetary woes. Currently, only 37.5% of the state’s pension obligations are funded, the largest funding gap of any state.

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