Special Report

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

Source: Thinkstock

6. Nebraska
> 2016 Unemployment: 3.2% (5th lowest)
> Pension funded ratio: 91.3% (8th highest)
> Credit rating and outlook: N/A/Stable
> Poverty: 11.4% (15th lowest)

Nebraska, now the sixth best run state in the country, has ranked among the top five in each of the previous six years. Nebraska is in a far better position financially than most states. The state has set aside a rainy day fund equal to 16.1% of its 2018 budget, partially to reduce the likelihood of future tax hikes. Nebraska’s rainy day fund as a share of its annual expenditures is nearly double the comparable average across all states and higher than that of all but six other states. Additionally, Nebraska’s debt accounts for only 15.9% of its total revenue, the second lowest debt-to-revenue ratio of any state.

Not only is Nebraska in a better fiscal position than most states, but its job market is one of the healthiest in the country. Only 3.2% of the state’s labor force were out of a job in 2016, well below the 4.9% 2016 U.S. unemployment rate.

Source: Thinkstock

7. North Dakota
> 2016 Unemployment: 3.2% (5th lowest)
> Pension funded ratio: 70.4% (22nd lowest)
> Credit rating and outlook: Aa1/Negative
> Poverty: 10.7% (10th lowest)

Breaking a five-year streak of ranking as the best run state in the country, North Dakota dropped this year to seventh overall. For much of the past decade, an oil boom led to economic growth and an explosion of jobs in the state. However, falling oil prices have contributed to large numbers of residents leaving the state and a substantial GDP decline, and these declines were finally enough to push the state out of the No. 1 position.

Still, North Dakota outranks most states in a number of key measures of government efficacy. Just 3.2% of the North Dakota workforce was unemployed in 2016, far less than the 4.9% national annual unemployment rate and the fifth smallest rate of any state. Moody’s rates North Dakota’s bonds a near-perfect Aa1 rating, citing the state’s “history of sound budget management” and “strong reserves.” However, Moody’s gave the state’s credit rating a negative outlook, suggesting a prolonged economic downturn could lead to a downgrade. If that happens, North Dakota might fall even further down the list in next year’s ranking.

Source: Thinkstock

8. Idaho
> 2016 Unemployment: 3.8% (11th lowest)
> Pension funded ratio: 91.8% (7th highest)
> Credit rating and outlook: Aa1/Stable
> Poverty: 14.4% (19th highest)

Underfunded state pension systems are a major problem in the United States and could potentially affect millions of Americans who will be depending on state retirement benefits. Idaho is in far better shape than most states, however, as nearly 92% of its pension obligations are funded. In comparison, only about 72% of state pension systems are funded on average nationwide.

While crime rates are subject to a range of factors outside of a state’s control, a low violent crime rate can be indicative of effective policing. There were only 230 violent crimes in Idaho for every 100,000 residents in 2016, one of the lowest violent crime rates among states and well below the violent crime rate nationwide of 386 per 100,000 Americans.

Source: Thinkstock

9. Colorado
> 2016 Unemployment: 3.3% (7th lowest)
> Pension funded ratio: 60.4% (8th lowest)
> Credit rating and outlook: Aa1/Stable
> Poverty: 11.0% (12th lowest)

In the 12 months ending in July 2016, Colorado’s population grew by 1.1% due to net migration, nearly four times the national growth rate and among the most of any state. The rising population has led to increased housing demand and construction activity. Over the past year, the value of a typical home in Colorado rose 10.7%, from $283,800 to $314,200, the largest percentage increase of any state. Largely due to the increased residential construction, Denver is currently home to the third most cranes of any major city. Cranes are also being used in the construction of a number of mixed-use commercial developments.

New residents are likely attracted by the large number of advanced, high-paying jobs the state has to offer. Some 14.0% of workers in Colorado are employed in professional, scientific, and management positions, the third largest share of any state.

Source: Thinkstock

10. Hawaii
> 2016 Unemployment: 3.0% (3rd lowest)
> Pension funded ratio: 62.4% (11th lowest)
> Credit rating and outlook: Aa1/Stable
> Poverty: 9.3% (2nd lowest)

The typical household in Hawaii earns $74,511 a year, nearly $17,000 more than the typical American household. With a strong tax base, the Hawaiian government brings in the equivalent of $4,540 a year in tax revenue per resident — more than all but two other states.

The high median income is partially attributable to the relative availability of jobs in the state. Only 3.0% of Hawaii’s labor force were out of work in 2016, nearly the lowest unemployment rate in the country. For those Hawaiians who are unemployed, the state has one of the most generous safety nets in the country. The average weekly payout for unemployment insurance recipients is $490, and 39% of unemployed state residents receive insurance benefits — each among the highest such figures of any state.

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