January 23, 2021

Florida TaxWatch Economic Commentary

Florida's fiscal strength ranked 5th best nationally

| 12/1/2015

A recent study by George Mason University’s Mercatus Center reviewed the fiscal health of the United States, breaking down each state individually for comparison across several standardized metrics. The report outlines various aspects that impact each state’s fiscal health, including (Florida rank)1:

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  • Cash solvency (2nd): a measure of whether a state has enough cash to cover its short term bills;
  • Budget solvency (5th): a measure of whether a state can cover its fiscal year spending out of current revenues;
  • Long-run solvency (31st): a measure of whether a state has a hedge against large long term liabilities;
  • Service-level solvency (4th): a measure of how high revenues, taxes, and spending are compared to a state’s personal income tax; and
  • Trust fund solvency (11th): an overall measure of how much debt a state has.

After calculating the relative impacts of each measure on each state, the George Mason University study ranked Florida fifth in the nation in overall fiscal condition. This Economic Commentary takes a look into some of these measurements, as well as examining other areas that affect Florida’s fiscal standing.

One important factor that impacts a state’s fiscal standing is the state’s reserve fund. According to a Pew Charitable Trusts study, the total balance of Florida’s reserve fund is approximately $3.5 billion, the fifth highest gross amount in the nation.2 In fact, it is estimated that Florida could run on only reserve funds for 47.5 days, more than 20 above the nation’s median of 25.9 days.3

1     Norcross, Eileen. “How Does Florida Compare to Other States?” Mercatus Center at George Mason University (n.d.): n. pag. Web. July 2015.
2     “Fiscal 50: State Trends and Analysis.” PEW Charitable Trusts, 11 Nov. 2015. Web.
2     Ibid.

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Tags: Government/Politics & Law, Florida TaxWatch

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