Montana ranks as the most fiscally prudent state in the country, a study in Governing magazine shows.
A study by Michael Cembalest for J.P. Morgan sought to measure how much state governments owe in bonded debt and liabilities for pensions and other post-employment benefits such as retiree health care.
To see how all the states would stack up, he assumed a 6 percent return on pension investments (Montana’s assumes a return 7.75 percent), level annual payments and a 30-year term for paying down liabilities. Then he compared the states.
Montana had the lowest obligations, followed by Nebraska, while Illinois and Connecticut had the highest.
“Based on all debt and pension obligations, we are the most fiscally prudent state of the 50 states,” state Budget Director Dan Villa said. “We have the lowest cost as a percentage of state revenues, and we’re making one of the highest percentage contributions toward it. The gist of it is our debts are lower and we have more money than other states to pay them.”
Gov. Steve Bullock has a solid fiscal management strategy, Villa said.
“The comparison to other states is further evidence of the fiscally responsible manner in which Montana state government is operating,” Bullock said.
“We are maintaining a rainy day fund to ensure we are prepared for unforeseen events like floods, fires or federal shutdowns, we are paying our bills so that we do not pass liabilities on to future generations, we gave all Montana businesses a tax cut, and we are making historic investments in education to ensure a future workforce that is prepared for the jobs of the future.”
Villa said Bullock made it clear in his first budget proposal that he wanted to leave a strong ending fund balance to weather a storm, not to spend more than the state takes in and address longer term liabilities like pensions, and that’s exactly what occurred.