States Face $811 Billion Debt Burden, Leaving Taxpayers On The Hook

A recent report reveals that states across the country are facing a staggering $811 billion debt. According to the “State of the States” analysis from Truth in Accounting, state governments are falling short, with financial commitments far outpacing their resources. This means taxpayers are left with the responsibility of covering this deficit in the future.

At the end of fiscal year 2023, state governments reportedly had $2.9 trillion in debt but only $2.1 trillion in assets. This gap leaves 27 states with what Truth in Accounting terms “taxpayer burdens.” In these states, each resident would need to pay an average of at least $900 to make up for the shortfall.

Some states, like Massachusetts, New Jersey, Illinois and Connecticut, are in especially poor fiscal health. To cover their deficits, each resident would have to pay over $25,000, resulting in each of these states receiving a failing grade from Truth in Accounting. Meanwhile, 23 states have what’s known as a “taxpayer surplus,” with enough funds to pay off their debts and extra left over. North Dakota, Alaska, Wyoming and Utah have surpluses over $10,000, earning them the top “A” rating.

The report reveals that a large portion of the debt — $840 billion — is owed for pensions. These pensions are promised to government workers like teachers and police, yet states have only saved up 70% of the funds needed. Additionally, states owe $493 billion for retiree healthcare benefits but have saved just 14% of that total.

Truth in Accounting warns that some state officials have underfunded pensions and benefits to cover other projects and keep taxes low. This strategy, the report says, is equivalent to running up credit without a plan to pay it back. The group calls for more transparency in state budgets, as well as for leaders to address the growing debt rather than hiding it with “accounting tricks.”