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June 3, 2016

It has become a drumbeat. Despite being one of the wealthiest states in the country, New Jersey comes up short year after year for its poor fiscal health. The Mercatus Center of George Mason University has just released its annual report regarding the fiscal health of the individual United States. The good news: New Jersey moved up. The bad news: The state moved up only one slot to 48.

The two worst states, according to this report, are Connecticut (50) and Massachusetts (49).

The ranking looked at five factors. New Jersey performed best at “service-level” solvency, which basically rates states regarding their relative wealth to the services they offer. New Jersey’s “long-run” solvency, which rates whether the state has enough assets to protect itself against future shocks, was ranked the worst in the country (other than Puerto Rico), given that it has such high long-term liabilities.

New Jersey did not perform much better when it came to “budget-solvency,” which looks at current costs and budget shortfalls. In this category, New Jersey ranked 49th.

Trust-fund solvency was rated 40th in the country, and again, the state’s relative wealth seemed to protect it from faring worse, since this category looked at unfunded liabilities and debt compared with personal income. Cash solvency was also identified as a problem; the state ranked 38th. That category looked at whether a state has enough cash on hand to cover short-term debts.

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