The Homa Files

Punch line: What do you get when you have union dominance, lots of  state employees, and a comfortable environment for moochers?  Well, a Dem majority with mountains of debt, lots of unfunded pension liabilities, and enough social services to choke a horse. 

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Excerpted from Forbes: Political Litmus Test: Bluest States Spilling The Most Red Ink, 02.25.10 

Want to know which states are in the worst financial condition? One telling indicator that might not immediately come to mind is whether most of its citizens identify themselves as Democrats.

The five states in the worst financial condition–Illinois, New York, Connecticut, California and New Jersey–are all among the bluest of blue states.

Forbes’ metrics for each state included unfunded pension liabilities, changes in tax revenue, credit ratings, debt as a percentage of Gross State Product, debt per capita, growth expectations for employment and the state economy, net migrations and a “moocher ratio” that compares government employees, pension burdens and Medicaid enrollees to private-sector employment.

Why do Democratic states appear to be struggling more than Republican ones? It comes down to stronger unions and a larger appetite for public programs.

“Unions in general have more influence in Democratic-controlled states … where they’re strong you have bigger demands for social services and coalitions with construction companies, road builders and others that push up debt.”

Of the 10 states in the worst financial condition, eight are among a total of 23 defined by Gallup as “solidly Democratic,” meaning the Democrats enjoy an advantage of 10 percentage points or greater in party affiliation. These states include the ones listed above as making up the bottom five, plus Massachusetts, Ohio and Wisconsin.

Of the three other basement-dwellers, Kentucky is defined as “leaning Democratic” (a five- to 10-percentage-point Democratic advantage) and the remaining two–Louisiana and Mississippi–are termed politically “Competitive” (less than a five-percentage-point advantage for either party). Louisiana tilts slightly Democratic and Mississippi slightly Republican.

The majority Republican states ranked among the financially healthiest are Utah, Nebraska, Texas, North Dakota and Montana.

Utah, the fiscally fittest state, has debt of just $442 and unfunded pension obligations of $7,272 per resident. It is also America’s second reddest state with a 21-percentage-point Republican advantage in party affiliation. The Beehive state boasts a triple-A credit rating from Moody’s.

Illinois is in the worst financial condition, with per-capita debt of $1,877 and unfunded pensions of $17,230. Moody’s rates Illinois’ general obligation debt A1, ahead of only California’s.

Full article:
http://www.forbes.com/2010/02/25/democratic-states-bad-financial-shape-personal-finance-blue.html

This entry was posted on March 2, 2010 at 7:59 am and is filed under Financial Crisis, Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.