State of the states


Colleen Spagnuolo

  • Senior Vice President, Senior Municipal Analyst
  • Read bio

In this video segment, Colleen Spagnuolo provides insight into the current economic status of the states which the Municipal team covers. States are enjoying the longest economic expansion, although muted, in modern history and overall, appear on solid ground. Fiscal revenue for 2019 came in above 2018 and projections for 2020 growth remain strong. Navigate through the video below for a more detailed look into the state of the states.

Arizona: Arizona has grown steadily since the recession, after being especially hard hit due to the state’s housing market collapse. The state has low-income levels but also a low cost of living. It has a large retiree population but is also seeing an influx of new employers and strong population growth. Its unemployment rate has come down to 4.7% in November, well below its peak of 10.4% in 2010, but still above the national average of 3.5%. Arizona has low debt, pension, and OPEB (other postemployment benefit) levels but its pension-funded ratio is only 73% and it has not been meeting its full annual pension contributions. It has been able to achieve structural fiscal balance since fiscal 2018 between ongoing revenues and expenditures and has grown its reserves to account for 13.9% of expenditures in 2019.

California: California has a large and diverse economic base and continues to enjoy above-average GDP and employment growth. Its high cost of living has contributed to accelerated out-migration and its population growth is below the national average. The state’s unemployment rate was 3.9% in November, which was slightly above the national rate of 3.5%. It has high revenue volatility but has been able to grow its budget reserves to mitigate this exposure. Over the next three years, the state plans to make additional deposits in order to keep its reserve account at 10% of general fund revenues and expects that total budget reserves will be close to 15% by 2023. It has above-average leverage and fixed costs, but leverage burdens are far lower than the most heavily burdened states. Its pension-funded ratio is moderate at 71%.

Colorado: Colorado has a broad and diverse economy, with better-than-average income, employment, and population trends. Its population growth exceeds national averages and it enjoys a very low unemployment rate of 2.6%, much stronger than the national rate. It has low debt and OPEB levels but has weak pension-funded levels of 44%. Its reserves are projected to account for 8.5% of appropriations at the end of 2020, which is above the required reserve amount of 7.5%.

Idaho: While Idaho has below-average socioeconomics, it has been experiencing strong in-migration and overall growth in its economy. Idaho’s unemployment rate remained low at 2.9% in November, much lower than the national rate. The state has a history of conservative management and strong liquidity. It actually cut its income tax rate in 2018, reducing both the personal and corporate tax rates by 0.475%. Its reserves account for a strong 20% of revenues. Idaho has a low debt burden and a strong pension funded ratio of 91%.

Minnesota: Minnesota has a diverse economy and high wealth levels. Its unemployment rate was 3.3% in November, slightly below the national average of 3.5%. Fixed costs remain low for the state and its pension-funded status is solid at 81%. Despite some near-term structural budget deficits, the state has been able to build up its reserves from $266 million in 2010 to $2.5 billion in 2019. The reserves are projected to account for 10.5% of 2020 revenues.

New Jersey: New Jersey has a diversified economy and high wealth levels along with an educated workforce. Its unemployment rate was 3.4% in November, which was roughly in line with the national average. The state’s high cost of living has led to out-migration, as its population growth has consistently trailed the national average. The state has minimal budget flexibility given its high debt burden and rising pension burden. Despite the transferred ownership of its lottery enterprise, its pension liability remains large with a funded ratio at 38% due to not fully funding pension contributions in recent years. Its budgetary fund balance accounts for 4.3% of revenues but is budgeted to decline to 3.3% in 2020.

New York:New York has a large and diverse economy with high wealth levels. Its unemployment rate remained unchanged at 4% in November, higher than the national average of 3.5%. While the state has a diverse economy, it does have a higher-than-average reliance on financial services given its progressive income tax structure. Its Rainy Day Fund totaled $790 million at the end of 2019, which equates to 2.8% of spending. The Governor’s goal is to boost deposits to the Rainy Day Fund to bring it to 7% of spending within five years and 10% of spending within 10 years. The state has high debt levels but its conservative pension funding has resulted in a pension-funded status of 99%.

Oregon: Oregon has had steady economic growth and positive financial performance. Oregon’s economic growth has been bolstered by strong in-migration as the state’s population growth has outpaced that of the nation. Its unemployment rate was 3.9% in November, slightly higher than the national average of 3.5%. It has sound financial controls and strong liquidity with total reserves equal to 20% of revenues. In 2019, it enacted a corporate activity tax (CAT) to begin in 2020 and support $1.6 billion of dedicated K-12 and Pre-K education funding. Debt and long-term liability levels are moderate, and its pension-funded ratio is solid at 82%.

Pennsylvania: Pennsylvania has a large economic base but is a slow growing and aging state. Its unemployment rate was 4.3% in November, above the national average of 3.5%. It has a weak financial profile with a slim reserve of $25 million. The state has high debt and pension levels, resulting in high fixed costs in its budget. Its pension-funded ratio is below average at 57%.

Sources:, Moody's, S&P, Urban Institute,, and Census Bureau.

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