An annual ranking that names the best financially managed states -- used as a marketing tool to attract out-of-state businesses -- shows Maryland slipped a notch to a still laudable fourth place this year.

The salt in the wound, however, is that the state's toughest economic-development competitor, Virginia, moved ahead of Maryland into first place in Financial World magazine's third annual "State of the States" rankings.

The magazine judges the states by accounting and financial reporting systems; program performance evaluations; bond ratings; revenue and spending estimates and other budgeting measures.

Gov. William Donald Schaefer said yesterday that the late approval of the budget this year might have affected Maryland's rating. He also pointed out that he had to contend with revenue estimates that were $1 billion off during the past year.

The survey, which was completed after the budget agreement on April 10, did criticize Maryland for its "revenue estimating problems," as well as the obvious revenue and expenditure imbalances.

Virginia Gov. L. Douglas Wilder told Financial World in its May 12 issue that he was gratified that the magazine supported "the underlying philosophy of my administration -- that prudent fiscal management is only possible if you're willing to streamline government, hold the line on spending and not increase taxes on the people."

Utah and Missouri, ranked first and second last year, fell a notch this year, while Tennessee, which was ranked No. 6 in 1991, moved up a spot to round out the top five.

Virginia's ranking surprised at least one budget specialist. "Virginia's in a real mess," said Maryland Sen. Laurence Levitan, a Montgomery County Democrat who is chairman of the Senate Budget and Taxation Committee.

"I think we got the state back in pretty good shape," Mr. Levitan said of Maryland, referring to the $12.1 billion budget agreement finished a week past the state's constitutional deadline.

State rankings

State rankings

Financial World magazine's annual ranking of how well states are financially managed, and last year's ranking.

(The magazine judges the states' accounting and financial reporting systems; program performance evaluations; bond ratings; revenue and spending estimates; and other budgeting measures.)

1) Virginia 4

2) Utah 1

3) Missouri 2

4) MARYLAND 3

5) Tennessee 6

6) Oregon 17

7) South Carolina 5

8) Wisconsin 10

9) Minnesota 9

10) Florida 14

11) Texas 27

12) Washington 7

13) Hawaii 15

14) Nevada 13

15) Delaware 16

16) North Carolina 8

17) New Jersey 20

18) South Dakota 32

19) Indiana 11

20) Georgia 18

21) Nebraska 31

22) North Dakota 42

23) Iowa 12

24) Kentucky 37

25) Arizona 2926) Arkansas 34

27) Pennsylvania 21

28) New Hampshire 19

29) Kansas 40

30) Connecticut 46

31 Colorado 25

32) Alabama 22

33) Ohio 28

34) Michigan 26

35) Idaho 38

36) Mississippi 23

37) Louisiana 24

38) Rhode Island 44

39) Oklahoma 39

40) New York 43

41) Montana 30

42) Illinois 36

43) Vermont 49

44) West Virginia 47

45) New Mexico 45

46) California 33

47) Alaska 33

48) Maine 48

49) Massachusetts 50

50) Wyoming 35