Special Report

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

Source: Thinkstock

11. Texas
> 2016 Unemployment: 4.6% (23rd lowest)
> Pension funded ratio: 75.6% (22nd highest)
> Credit rating and outlook: Aaa/Stable
> Poverty: 15.6% (12th highest)

Home to over a third of all U.S. crude oil reserves, Texas is a resource-rich state that leads the nation in oil production. Though oil prices have yet to recover from their precipitous fall in 2014, resource extraction remains a significant revenue source for the state government. In a better fiscal position than most states, Texas has the equivalent of more than a fifth of its annual budget saved in a rainy day fund, nearly triple the average among all states. Partially as a result, Texas is one of only 14 states with a perfect credit rating from Moody’s and a stable outlook.

While a well-run government is not reason enough for Americans to choose to live in a given state, people are flocking to Texas. Due largely to inbound migration, the Lone Star State’s population expanded by over 430,000 between July 2015 and July 2016, more than any other state.

Source: Thinkstock

12. Massachusetts
> 2016 Unemployment: 3.7% (10th lowest)
> Pension funded ratio: 62.0% (10th lowest)
> Credit rating and outlook: Aa1/Stable
> Poverty: 10.4% (9th lowest)

Massachusetts is the best run state in New England, and the 12th best run state nationwide. Many states ranking on the better half of this list benefit from higher than typical tax revenue, and Massachusetts is no exception. The state collects the equivalent of $3,960 per resident annually in taxes, more than all but seven other states and well above the average across all states of $2,821.

Despite the relatively high tax revenues, the state borrows heavily. Massachusetts’ debt amounted to $11,056 per person as of 2015, the most debt per capita of any state.

Source: Thinkstock

13. South Dakota
> 2016 Unemployment: 2.8% (2nd lowest)
> Pension funded ratio: 104.1% (the highest)
> Credit rating and outlook: Aaa/Stable
> Poverty: 13.3% (24th highest)

Tax codes and laws can have a considerable impact on a state’s economy and job market, and in South Dakota, only 2.8% of the labor force were out work in 2016, nearly the lowest unemployment rate of any state and less than half the 4.9% U.S. annual unemployment rate. Low unemployment can help generate more tax revenue for state coffers and one of a minority of states with a perfect credit rating and stable outlook from Moody’s, South Dakota is in a sound fiscal position.

South Dakota also has one of the most stable housing markets of any state. As of 2015, just one of every 1,172 homes in the state were in some part of the foreclosure process, this is the second lowest foreclosure rate of any state and far below the national foreclosure rate of one in every 142 homes.

Source: Thinkstock

14. California
> 2016 Unemployment: 5.4% (9th highest)
> Pension funded ratio: 74.0% (25th lowest)
> Credit rating and outlook: Aa3/Stable
> Poverty: 14.3% (20th highest)

The most populous state in the country, California might intuitively seem like the most difficult state to manage. Despite its size, California ranks better than most. Like most of the best run states, California has a solid tax base to draw from. The typical household in the state earns $67,739, about $10,000 more than the median income nationwide. Each year, the state brings in about $3,850 per resident in tax revenue, more than all but eight other states and about $1,000 more than is typical nationwide.

California allocates a relatively large share of its budget to helping its neediest residents. Some 40.4% of state spending goes towards public welfare programs, the largest public welfare allocation in any state.

Source: Thinkstock

15. Delaware
> 2016 Unemployment: 4.4% (21st lowest)
> Pension funded ratio: 89.3% (9th highest)
> Credit rating and outlook: Aaa/Stable
> Poverty: 11.7% (16th lowest)

Most of the best run states are in the West. Delaware, though, is the second highest ranking state on the eastern seaboard. One of only 14 states with a perfect credit rating and stable outlook from Moody’s, Delaware is a fiscally responsible state. The state’s rainy day coffers are worth about 11.1% of its annual budget, a larger share than the 8.2% average across all states.

As is the case in many of the best run states, Delaware residents are relatively wealthy. The typical household in the state earns $61,757 a year compared to the $57,617 the typical American household earns nationwide. High incomes are driven in part by strong employment in sectors that tend to pay well. Some 8.9% of workers in the state are employed in the generally high-salaried finance and insurance sector, the largest share of any state.

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