Nebraska, home of Warren Buffett, tops a recent rating of state finances.

Nebraska’s strong reliance on natural resources and low debt load contributed to its ascent to the top of Conning’s 2024 poll.

States’ capacity to attract immigrants from higher-cost states and increase tax revenues and overall financial stability cannot be solely dependent on affordability.

Rather, Nebraska—a state that produces energy and has a comparatively low debt load—rose seven places to the top of Conning’s 2024 credit ranking of all 50 U.S. states.

Another state that depends mostly on natural resources, Wyoming, moved up nine spots to the No. 2 position from the previous year. Florida and Texas, two pandemic hotspots, plummeted to No. 3 and No. 6, respectively.

Citroen stated, “Those trends were amplified during the pandemic in that people had a lot more freedom to move because jobs had gone remote.” Population growth is one of 13 factors the company examines for its annual rankings, such with a state’s debt load, housing costs, and economic growth.

He noted that fewer jobs are still completely remote and that more people are returning to the cities they left behind a few years ago. 

Citroen drew attention to the “flip side” of population expansion, or the additional costs receiving states incur in order to support services for new arrivals. The Conning team anticipates that more workers will return to major cities if the labour market worsens.

Citroen told MarketWatch, “What is really important is that states have to manage their budgets really well.” He included the negative effects of inflation and rising state budgetary costs with the positive effects of a rise in federal money, stock market gains, and economic expansion. 

Citroen added that states are required by their constitutions to balance their budgets and are not able to “print money,” in contrast to the federal government.

States also need to address climate risks, as Hawaii’s devastating wildfires that destroyed portions of Maui last year demonstrate. Hawaii fell to the bottom of Conning’s 2024 rankings.

Recent “high-profile and extremely damaging wildfires” seemed to be affecting “investor perception about the safety” of electric utility muni bonds, according to Barclays researchers on Monday. They mentioned that there has already been a fire in western Texas that has burned over a million acres in the first quarter, surpassing the annual average for scorched land.

Omaha is the birthplace of multibillionaire investor Warren Buffett, whose company Berkshire Hathaway Inc. (BRK.A) (BRK.B) maintains its headquarters there as well. Buffett expressed concerns about wildfire hazards and potential vulnerabilities of utilities in states prone to them in his annual letter to shareholders in February.

FactSet reports that on a one-year basis, the ICE BofA US Corporate index was up 4.7% and the ICE BofA US Municipal Securities Index was up 2.8% on Monday.

A year ago, shares of the Vanguard Tax-Exempt Bond ETF VTEB and the iShares National Muni Bond ETF MUB both saw a 0.3% decrease.

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