And while Minnesota wins points this year for its vastly improved state finances—the state has gone from a $6 billion budget shortfall when Gov. Dayton took office in 2011 to a $2 billion surplus going into this fiscal year, thanks in part to that tax increase—our study finds that the most creditworthy states are overwhelmingly run by Republicans. Of the 15 states with AAA credit ratings, according to Moody's Investor Services, 10 have Republican governors. They include three of our top five—Texas, Utah and Georgia. Democrats control four states—Delaware, Missouri, Vermont and Virginia; while one state—Alaska—is run by an Independent. The three states that are so flush they don't need to issue general obligation debt—Nebraska, South Dakota and Wyoming—are also under GOP control.
To be fair, Republicans control the majority of statehouses—31—to be exact, giving them a built-in edge. And red-state balance sheets are not universally pristine. New Jersey's credit rating has plummeted to A2—Moody's second-lowest rating—after nine downgrades under Gov. Chris Christie. And the agency says the outlook for the state is negative. That gives New Jersey the second worst rating in the nation.
The worst, Illinois, which recently switched from Democratic to Republican control, has an A3 rating with a negative outlook, thanks to a full-blown crisis over its public pension plans. Gov. Bruce Rauner, a former private equity executive, took office this year looking at more than $100 billion in unfunded pension liabilities and no clear way out of a hole dug during years of mismanagement by both Democratic and Republican administrations.
We design our Top States study, measuring 10 different categories of competitiveness, to reflect the realities of the battle for business: There is more than one way to win. This year's results prove that, once and for all. And this time around, neither party comes away with a talking point.