States That Need Most Financial Help Due to COVID-19
The coronavirus pandemic has consumed states’ resources at an unprecedented rate as they struggle to provide both medical and financial support to their residents, despite taking in far less tax revenue than usual. For example, New York, the state hit hardest by COVID-19, has a staggering $13.3 billion budget shortfall. While many states are beginning to reopen business in stages in an effort to restart their economies, they have months of economic damage and millions of job losses to reckon with. All states are struggling during this crisis, but some are more prepared financially to survive it than others.
In order to determine the states that may need the most financial help due to COVID-19, WalletHub compared the 50 states across 18 unique metrics. Our data set ranges from the state’s rainy-day funds per capita to state and local debt per capita to the share of the workforce in highly-affected industries. Read on for the ranking, additional insight from a panel of experts and a complete description of our methodology.
States That Need Most Financial Help Due to Coronavirus
|Overall Rank||State||Total Score||“State Financials” Rank||“Health & Employment Landscape” Rank|
Ask the Experts
The coronavirus pandemic has left states struggling with more expenses than usual but a loss of revenue. For more insight on this topic, WalletHub turned to a panel of experts. Click on the experts below to view their bios and responses to the following key questions:
- The growing costs of the Coronavirus pandemic have put an unexpected strain on states’ finances. What are the best measures that can be taken to protect residents and keep public services running?
- Given the impact of the COVID-19 crisis, what might be the timeline for the economic rebound?
- What are the most important lessons that state authorities can learn from the economic fallout of this pandemic?
In order to identify the states that need the most financial help due to COVID-19, WalletHub compared the 50 states across 18 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the most help needed.
We then determined the weighted average across all metrics to calculate an overall score for each state and used the resulting scores to rank-order our sample.
State Financials – Total Points: 60
- State Rainy-Day Fund per Capita: Double Weight (~5.45 Points)
Note: This metric measures the state’s rainy-day fund (RDF) balance as a percentage of the prior year’s general fund budget.
- Days' Worth of Expenditures in Rainy-Day Funds: Double Weight (~5.45 Points)
- Unfunded Pension Liabilities as Share of GSP: Full Weight (~2.73 Points)
- Funding Ratio of Public Pension Plans: Full Weight (~2.73 Points)
- Fiscal Health Index: Full Weight (~2.73 Points)
Note: This metric is based on the George Mason University Mercatus Center’s state fiscal rankings, particularly the State Fiscal Condition Index, which refers to the sum of cash, budget, long-run, service-level and trust-fund solvency indices for each state.
- State and Local Debt per Capita: Triple Weight (~8.18 Points)
- State Fiscal Balance: Full Weight (~2.73 Points)
Note: To determine whether states had a negative fiscal balance, revenue and expenses were divided to calculate the percentage of expenses covered by revenue.
- Tax Revenue Recovery Since Recession: Full Weight (~2.73 Points)
- Tax Revenue Shortfall in Case of Severe Recession: Double Weight (~5.45 Points)
- State Preparedness for Severe Recession: Quadruple Weight (~10.91 Points)
- Preparedness of States for Unemployment Insurance Claims: Double Weight (~5.45 Points)
Note: This composite metric measures both reserve ratio, and solvency level.
- Small-Business Loan Amount Approved in Response to COVID-19 as Share of Eligible Payroll: Double Weight (~5.45 Points)
Health & Employment Landscape – Total Points: 40
- Unemployment Claims Increase Since the Beginning of the COVID-19 Pandemic: Triple Weight (~13.33 Points)
- GDP Generated by Highly Affected Industries as Share of Total State GDP: Double Weight (~8.89 Points)
Note: This composite metric includes:
- Accommodation and Food Services
- Arts, Entertainment, and Recreation
- Retail Trade
- Mining, Quarrying, and Oil and Gas Extraction
- Educational Services
- Real Estate, Rental and Leasing
- Other Services, Except Government and Government Enterprises
- Share of Workforce in Accommodation & Food Services, Arts, Entertainment, & Recreation; Air Transportation; Taxi Service: Full Weight (~4.44 Points)
- 5-year Survival Rate of Private Sector Establishments: Full Weight (~4.44 Points)
- “States with the Most Vulnerable Populations to Coronavirus” Score: Full Weight (~4.44 Points)
Note: This metrics is based on WalletHub’s “States with the Most Vulnerable Populations to Coronavirus” ranking.
- “States with the Best Health Infrastructure for Coronavirus” Score: Full Weight (~4.44 Points)
Note: This metrics is based on WalletHub’s “States with the Best Health Infrastructure for Coronavirus” ranking.
Sources: Data used to create this ranking were collected from the U.S. Census Bureau, U.S. Bureau of Labor Statistics, U.S. Department of Labor, U.S. Bureau of Economic Analysis, Tax Foundation, The Pew Charitable Trusts, American Legislative Exchange Council, Mercatus Center at George Mason University, usgovernmentspending.com, Moody's Analytics, Bloomberg.com and WalletHub research.
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