OTHER VIEW: State is in good shapeGood news is often in short supply and whenever our state or region shows up No. 1 on a listing, we like to call it out. A recent edition of the weekly investor newspaper Barron’s had a cover that proclaimed “Best & Worst Run States” and next to that headline was a postcard showing South Dakota, above a postcard from Connecticut.
By: Editorial board, Watertown Public Opinion
Good news is often in short supply and whenever our state or region shows up No. 1 on a listing, we like to call it out. A recent edition of the weekly investor newspaper Barron’s had a cover that proclaimed “Best & Worst Run States” and next to that headline was a postcard showing South Dakota, above a postcard from Connecticut.
So we decided to look into this article and discovered “the nation’s healthiest balance sheets belong to South Dakota, Iowa and Tennessee, while high debt levels and pension liabilities in Connecticut, Illinois and Hawaii should give municipal bond investors pause.”
A state heavily dependent on tourism like South Dakota can’t buy better promotional messages than that.
The article mentions how some local governments, like Stockton and San Bernardino in California, are turning to bankruptcy to solve their financial woes. That means those who invested in their bonds are up a creek.
Meanwhile, accolades like “a strong agricultural economy and a low jobless rate of 4.4 percent” along with “(state) debt and unfunded pensions (that) add up to just 1 percent of (the state’s) Gross Domestic Product” clearly point to the sound financial management in South Dakota. A nearby chart in the article shows South Dakota with a debt level to GDP of 0.7 percent and an unfunded pension liability to GDP of just 0.3 percent. Neighboring states like Iowa (0.6 percent and 0.7 percent), Nebraska (no debt and 1.7 percent), Minnesota (2.2 percent and 0.7 percent) and North Dakota (0.5 percent and 3.5 percent) were also doing fine. On the other end? All problems.
At the bottom, Connecticut’s debt to GDP level was 7.9 percent and unfunded pension liabilities to GDP was 9.2 percent, while Illinois was 4.9 percent and 11.4 percent and third from the bottom, Hawaii was 8 percent on debt and 8.1 percent on unfunded pensions. Translating those percentages into real numbers: Illinois, for example, has a pension fund that is less than 50 percent funded (hey teachers, state and local employees — how would you like retiring into that pension system?) and a budget deficit of more than $75 billion in 2010.
South Dakota’s positive results don’t just happen; they are the result of hard work and tough decisions. And as the economy continues to improve, South Dakotans will benefit quickly from that improvement whereas other states will not because they will have to make debt payments and payments to their unfunded pension liabilities.
Sounds like the old “you can pay me now or pay me later” and we think taking care of business and financial issues now is far better than doing so later. Don’t you agree?