Published November 27, 2012
| 24/7 Wall St.
How well run are America’s 50 states? The answer depends a lot on where you live.
Every year, 24/7 Wall St. conducts an extensive survey of all fifty states in America. Based on a review of data on financial health, standard of living and government services by state we determine how well each state is managed. For the first time, North Dakota is the best run. California is the worst run for the second year in a row.
The Top 5
1. North Dakota
> Debt per capita: $3,282 (22nd lowest)
> Budget deficit: None
> Unemployment: 3.5% (the lowest)
> Median household income: $51,704 (20th highest)
> Pct. below poverty line: 12.2% (13th lowest)
For the first time, North Dakota ranks as the best run state in the country. In recent years, North Dakota’s oil boom has transformed its economy. Last year, crude oil production rose 35%. As of August, 2012, it was the second-largest oil producer in the country. This was due to the use of hydraulic fracturing in the state’s Bakken shale formation. The oil and gas boom brought jobs to North Dakota, which had the nation’s lowest unemployment rate in 2011 at 3.5%, and economic growth. Between 2010 and 2011, North Dakota’s GDP jumped 7.6%, by far the largest increase in the nation. This growth has also increased home values, which rose a nation-leading 29% between 2006 and 2011. North Dakota and Montana are the only two states that have not reported a budget shortfall since fiscal 2009.
> Debt per capita: $2,694 (18th lowest)
> Budget deficit: 10.3% (32nd largest)
> Unemployment: 6.0% (7th lowest)
> Median household income: $56,322 (13th highest)
> Pct. below poverty line: 11.3% (6th lowest)
Wyoming is not the best-run state in the nation this year. The drop is largely due to the state’s contracting economy. In 2011, GDP shrunk by 1.2%, more than any other state. As a whole, however, the state is a model of good management and a prospering population. The state is particularly efficient at managing its debt, owing the equivalent of just 20.4% of annual revenue in fiscal 2010. Wyoming also has a tax structure that, according to the Tax Foundation, is the nation’s most-favorable for businesses — it does not have any corporate income taxes. The state has experienced an energy boom in recent years. The mining industry, which includes oil and gas extracting, accounted for 29.4% of the state’s GDP in 2011 alone, more than in any other state. As of last year, Wyoming’s poverty, home foreclosure, and unemployment rates were all among the lowest in the nation.
> Debt per capita: $1,279 (2nd lowest)
> Budget deficit: 9.7% (34th largest)
> Unemployment: 4.4% (2nd lowest)
> Median household income: $50,296 (22nd highest)
> Pct. below poverty line: 13.1% (tied-15th lowest)
Last year, Nebraska had the second-lowest unemployment rate in the nation at 4.4%. In Lincoln, the state capital, the unemployment rate was 4%, lower than all metropolitan areas in the country, except Bismarck and Fargo in North Dakota. Although far from the nation’s wealthiest state — median income was slightly lower than the U.S. median of $50,502 — Nebraska’s economy is strong relative to the rest of the U.S. The state is one of the leading agricultural producers, with the sector accounting for 8.3% of the state’s GDP last year. The state also had the second-lowest debt per capita in the country in fiscal 2010, at $1,279, compared to an average of $3,614 for states nationwide.
> Debt per capita: $2,356 (15th lowest)
> Budget deficit: 14.7% (25th largest)
> Unemployment: 6.7% (tied-11th lowest)
> Median household income: $55,869 (14th highest)
> Pct. below poverty line: 13.5% (tied-17th lowest)
In fiscal 2011, Utah had a budget deficit of $700 million, equal to 14.7% of the state’s GDP. This debt-to-GDP ratio is worse than half the states in the U.S. Despite these problems, Utah has committed to reducing expenses in place of raising taxes or increasing debt. The state has also limited its borrowing. Its total debt was just under $6.5 billion in fiscal 2010, or $2,356 per capita — less than most states — and 40.4% of 2010 tax revenue. Both Moody’s and S&P gave Utah their highest credit ratings because of the state’s strong fiscal management. Moody’s commented that Utah has a “tradition of conservative fiscal management; rebuilding of budgetary reserves after their use in the recession; [and] a closely managed debt portfolio.”
> Debt per capita: $1,690 (7th lowest)
> Budget deficit: 20.3% (18th largest)
> Unemployment: 5.9% (6th lowest)
> Median household income: $49,427 (24th highest)
> Pct. below poverty line: 12.8% (14th lowest)
Like many of the other well-run states, Iowa is one of the nation’s top agricultural centers — the industry accounted for 6.6% of the state’s GDP in 2011. The farm economy has contributed significantly to growth, with farm earnings rising rapidly and land values skyrocketing. State GDP rose by 1.9% between 2010 and 2011 — the 12th-highest increase in the country. Iowa’s unemployment rate fell from 6.3% in 2010 to just 5.9% in 2011, the nation’s sixth-lowest rate. The state has carried a low debt burden in recent years, averaging just $1,690 per capita in fiscal 2010, among the nation’s lowest. The state currently has the best possible credit ratings both from Moody’s and S&P.
For the worst-run states, and to see the entire list, visit 24/7 Wall St.