Study: Nassau County and Miami-Dade are the nation’s most fiscally-stressed counties

In an analysis of eight key financial metrics, Reason Foundation finds Nassau County, New York, and Miami-Dade County, Florida, each trigger five red flags out of eight key metrics, making them the most fiscally stressed county governments in the country.

Westchester County, New York; Prince George’s County, Maryland; Jefferson County, Alabama; Denton County, Texas; and Baltimore County, Maryland, each register four fiscal red flags, the study finds. Los Angeles County and Cook County are among the counties with three financial red flags.

America’s 100 most populous counties collectively reported approximately $757 billion in total liabilities at the close of the 2023 fiscal year. This substantial aggregate figure underscores the immense fiscal scale and responsibility shouldered by county governments. Counties serve as the foundational layer of local governance in most states, delivering services that range from law enforcement, courts, public health departments, social welfare programs, elections administration, property tax assessment and collection, emergency management, and—in many urban and suburban jurisdictions—major hospitals, regional airports, public transit systems, flood control districts, parks, libraries, and economic development initiatives.

These entities confront a complex mix of fiscal pressures: high fixed costs for public safety and health infrastructure, growing unfunded pension and other postemployment benefit (OPEB) liabilities, legal mandates to provide indigent defense and behavioral health services, and the capital-intensive nature of facilities such as correctional institutions, juvenile justice centers, and disaster-resilient infrastructure.

There is also tremendous variety in the size and composition of America’s most populous counties. The nation’s most populous county, Los Angeles County, is home to more than 10 million residents. Meanwhile, New Castle County in Delaware is within the 100 most populous counties despite boasting only about 570,000 residents.

This report delivers an objective analysis of financial health across America’s largest state and local governments. Using Reason Foundation’s unique database, compiled from the audited annual comprehensive financial reports of more than 20,000 local government entities, the analysis applies eight standardized financial metrics to assess both long-term solvency and short-term liquidity. Entities that exceed the objective standard on any metric are awarded a “red flag,” indicating a concerning trend.

A single red flag does not necessarily signal an immediate fiscal crisis, but each one points to structural weaknesses that deserve urgent attention.

Multiple red flags may indicate an entity is in a precarious financial position in both the short and long term.

These eight objective metrics include:

Long-term indicators

• Debt Ratio (total liabilities ÷ total assets): Entities should not hold more debt than assets.
• Unrestricted Net Position: Negative values indicate insufficient discretionary resources.
• Revenues Less Expenditures: Spending in excess of revenues leads to a deterioration of the balance sheet.
• Liabilities per Capita: Liabilities exceeding $10,000 per resident (or $20,000 per student for school districts) become increasingly difficult for taxpayers to service.

Short-term indicators

• Quick Ratio: Entities should hold at least enough liquid assets to cover bills scheduled to fall due over the next year.
• Quality of Receivables: If receivables are valued at greater than 30% of annual revenues, the entity may be experiencing difficulty collecting its assessments.
• Cash as Percentage of Assets: Holding less than 10% of assets as cash leaves governments vulnerable to cash crunches.
• Solvency Ratio (liabilities ÷ annual revenues): If liabilities are greater than double annual revenues, the entity’s ability to issue new debt may be limited, and taxpayers may have difficulty servicing debt.

Ranking these counties by total red flags across the eight standardized metrics reveals pronounced geographic, economic, and structural variation.

Fiscal red flags in the 50 most populous counties

Counties near older industrial cities, high-cost coastal regions, and certain legacy urban centers tend to accumulate the most red flags.

In contrast, many fast-growing Sun Belt counties, resource-rich Western counties, and several large suburban jurisdictions demonstrate far fewer or zero red flags.

Counties exhibiting the highest fiscal stress (four–five red flags)

Reason Foundation finds Nassau County, N.Y., and Miami-Dade County, Fla., each trigger five red flags.

Nassau County, a high-wealth suburban jurisdiction adjacent to New York City, faces severe long-term debt pressures. Nassau County owed more than twice as much debt as it held in assets in the 2023 fiscal year at $14.2 billion and $7.0 billion, respectively.

Its unrestricted net position was deeply negative, at -$9.9 billion.

Liabilities per capita amounted to $10,175 at the county level alone at the close of FY23; its debt was 3.65 times greater than its FY23 revenues of $3.9 billion. Nassau County also faced some short-term liquidity concerns, as its quick ratio measured only 0.98 despite holding 18.4% of its assets as cash. That was possible because the sheer size of the county’s debt so heavily outweighed its total assets.

Miami-Dade County is a consolidated city-county government that encompasses the Miami metropolitan area. Its liabilities per capita were the highest among all of America’s most populous counties in FY23 at $11,190, while its $30.2 billion in total debt was 2.44 times its annual revenue of $12.4 billion.

Miami-Dade County did hold more assets than debt, with $35.8 billion in total assets, but its unrestricted net position was still deeply negative at -$4.8 billion.

Miami-Dade County also faced some short-term liquidity concerns, with less than 4% of assets held as cash and a quick ratio of 0.86. However, residents of Miami-Dade County do not face additional liabilities as city taxpayers, because these figures represent totals for the combined city-county government.

Westchester County, New York; Prince George’s County, Maryland; Jefferson County, Alabama; Denton County, Texas; and Baltimore County, Maryland, each register four red flags, the Reason Foundation study finds.

These counties share common stress drivers: total debt exceeding 200% of annual revenue and a negative unrestricted net position. Jefferson County and Prince George’s County also saw their position deteriorate over the course of FY23 by spending in excess of revenues.

Counties with moderately high stress (three red flags)

Los Angeles County and Cook County are among the counties with three red flags.

The nation’s most populous county, Los Angeles County, California, also holds the largest total liabilities, at $62.4 billion.

Los Angeles County’s liabilities exceed total assets by a whopping $12.0 billion, meaning the county is functionally insolvent long-term. When considering restrictions on the use of assets, its unrestricted net position is even more deeply negative, at -$35.4 billion. This position deteriorated in FY23, as Los Angeles County spent $1.3 billion more than it took in as revenues—the highest among all large counties.

Nonetheless, LA County’s short-term liquidity markers remained strong as the county closed the year with $17.1 billion in cash—33.9% of its total assets—and another $8.0 billion in receivables.

Cook County, Illinois, often draws headlines for its debt overhang and triggers three red flags in this analysis. Its $21.1 billion in total liabilities far exceeds its total assets of $7.8 billion, yielding the highest debt ratio—269%—among America’s 100 most populous counties. This leaves its unrestricted net position deeply negative at -$14.1 billion—second only to Los Angeles County.

Cook County’s liabilities also outpace its annual revenues of $8.3 billion by a factor of 2.55. With 5.2 million residents, though, Cook County’s debt is spread across a large number of taxpayers, who owe $3,999 per capita.

Counties demonstrating strong fiscal positions (zero or one red flag)

Of America’s 100 most populous counties, 26 exhibit zero red flags at the close of FY23, Reason Foundation finds.

Another 33 counties trigger only one red flag. Many of these counties serve large metropolitan areas that are infrastructure-intensive, yet have avoided crippling debt while managing short-term liquidity prudently.

Maricopa County, Arizona, for instance, is the nation’s fourth most populous county and encompasses the Phoenix metro area. It has limited liabilities per capita to $763, and its overall debt is roughly equivalent to one year’s worth of revenue. Maricopa has twice as many assets as liabilities and maintains a positive unrestricted net position with healthy cash balances.

The nation’s fifth- and sixth-most populous counties also demonstrate that fiscal prudence is possible, even in Southern California. San Diego County holds $2.2 billion more in assets than debt, healthy cash balances, and liabilities per capita of just $2,344. San Diego’s only red flag was a negative unrestricted net position of -$1.4 billion.

Orange County’s $11.5 billion in assets outpace its $3.5 billion in liabilities by more than a factor of three. Its annual revenue of $3.9 billion exceeds its total liabilities, and liabilities per capita amount to just $1,100.

Nine counties in California display one or fewer red flags and several directly border Los Angeles County, which holds the most deeply negative unrestricted net position of any county in the nation.

Conclusions for county performance

Perhaps a surprising conclusion when evaluating counties’ financial performance is that no clear geographic trend corresponds to counties with multiple red flags. Although New York’s largest counties display numerous red flags, so do the largest counties in Florida and Texas.

Certain counties in both conservative- and progressive-leaning states display high signs of fiscal stress while other counties in these same states display constraint and prudence. In a few cases, neighboring counties within the same metro areas display vastly different trends regarding financial discipline.

These divergent outcomes are not inevitable consequences of population size, service complexity, or regional economics; they reflect differing approaches to financial management. Counties with exemplary fiscal records provide concrete, replicable models for jurisdictions seeking to strengthen resilience amid ongoing pressures from aging infrastructure, workforce demands, climate-related risks, and evolving federal and state funding environments.

State and local government finances in America: A comprehensive analysis of debt and liquidity

New Jersey and Connecticut are the most financially distressed states

Chicago and New York City are most fiscally stressed cities in the nation

Nassau County and Miami-Dade are nation’s most fiscally stressed counties

Fort Bend (TX) and Gwinnett County (GA) are the most fiscally stressed school districts in the nation

Full policy study: State and local government finances in America: A comprehensive analysis of debt and liquidity

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Source: https://reason.org/policy-study/state-local-government-finances-debt-liquidity/counties/