Louisiana placed No. 35 in fiscal health rankings of the states released Wednesday by the Mercatus Center at Georgia State University.
“These rankings are an early warning system for policymakers, journalists, and the public,” said the study’s author, Mercatus Senior Research Fellow Eileen Norcross. “While no ranking can capture all of a state’s fiscal dynamics, these can serve as a tool to guard against short-term and long-term risks or economic shocks.”
The study looked at five categories, including budget and “service-level” solvency.
Louisiana ranked No. 49 in budget solvency, a measure of whether a state can cover its fiscal spending from current revenue. But Louisiana was No. 18 in service-level solvency, which measures how high taxes, revenue, and spending are when compared to personal income.
The measure indicates a state’s fiscal slack, according to the study. If spending commitments demand more revenue, is the state in a good position to increase taxes without harming the economy?