National Survey: RI #1 State Most Likely to Go Bankrupt
Tuesday, February 01, 2011
A survey by a national Web site has named Rhode Island as the state most likely to go bankrupt—based on the ratio of its debt to its economy and the extent of its unfunded retirement obligations.
The ranking comes as discussion about state bankruptcies has grown more serious in recent weeks. There are major constitutional hurdles that have to be addressed, but, earlier this month, the New York Times reported that national policymakers had already quietly started the process of laying out a legal path for states to deal with their fiscal problems by declaring bankruptcy.
As troubled as Rhode Island’s finances may be, state officials have told GoLocalProv that they don’t compare to other states like California, which has begun issuing IOUs, and Illinois, which has simply stopped paying bills.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTFormer Gov. Don Carcieri’s office has disputed the comparison and current Governor Lincoln Chafee followed suit yesterday. “Governor Chafee can foresee no conceivable scenario that would lead to a bankruptcy filing for the State of Rhode Island,” Chafee spokesman Christian Vareika.
Yet, Rhode Island rises to the top of the list when its debt is compared to the size of its economy (Gross Domestic Product, or GDP), according to the Daily Beast Web site. The ranking also takes into account the extent of the unfunded pension obligation and unfunded health care obligations for retirees. In Rhode Island, those unfunded costs are $4.4 billion and $788 million, respectively. The Ocean State also had a debt of $9.2 billion in 2009, with a debt to GDP ratio of 19.19 percent.
Those numbers pushed Rhode Island to the top spot, ahead of California (#25) and Illinois (#4). The state also edged out neighbors Connecticut and Massachusetts, who came in a close second and third, respectively.
Top 10 States Facing Bankruptcy
Below are the top 10 states facing bankruptcy, according to the Daily Beast. (Click here for the full report. Click here to read the original GoLocalProv report on the possibility of bankruptcy in Rhode Island.)
1. Rhode Island
2. Connecticut
3. Massachusetts
4. Illinois
5. Hawaii
6. New Jersey
7. New Hampshire
8. Indiana
9. Louisiana
10. Oklahoma
