MuniLand: State of the States Summary and Link to the Report

We have completed our annual State of States credit analysis.  Please follow the link to the full report and charts here:  http://snwam.com/blog/2014/6/6/02qjko9hwpebnawsfjnu1me5jae8yp 
 
In summary,  fiscal year 2013 saw our sample states continue to rebound from the recession of 2008-09.  Aggregate revenues exceeded aggregate expenditures by greater amounts than in fiscal years 2012 and 2011, and liquidity also continued to improve.  The states’ capitalization metrics also recovered.  Unfortunately, the states’ fiscal successes did not extend to their debt metrics.  Bonded indebtedness grew slightly but was well controlled, meanwhile unfunded pension liabilities rose considerably faster despite large gains in the equity markets that are favored by pension managers.  Our bottom line for the states’ debt metrics is that they are accelerating faster than growth in all revenue sources.  The result is debt metrics are structurally out of balance with the fundamental state revenue outlook.  What is most discouraging is that so many of our sample states – virtually all of them – did not use the generally benign financial environment in FY 2013 to begin the process of controlling and ultimately reversing the relentless growth of their non-bond liabilities.  In all, FY 2013 presented a foregone opportunity to reduce the pace of long-term off-balance sheet liabilities growth and to better align future obligations with a sustainable rate of revenue growth.