Although 49 out of the 50 states are technically required to balance their budgets, nearly every U.S. state still owes billions of dollars in off-the-books debt and pension obligations, according to a new report from a government accounting watchdog. The study, conducted by the Chicago-based Institute For Truth In Accounting, found that only four U.S. states — Nebraska, North Dakota, Utah and Wyoming — have enough money to cover all of their financial commitments, including pension payments and retiree healthcare.
The rest remain solidly in the red. In six states, taxpayers would have pay more than $20,000 each to cover their state’s obligations.
Here are the highest unfunded state obligations, via the report:
- Connecticut: $53.4 billion, or $41,200 per taxpayer.
- New Jersey: $106.6 billion, or $34,600 per taxpayer.
- Illinois: $110.6 billion, or $26,800 per taxpayer.
- Hawaii: $11.5 billion, or $25,000 per taxpayer.
- Kentucky: $29 billion, or $23,800 per taxpayer.
- Massachusetts: $48.1 billion, or $20,100 per taxpayer.
The report blames the huge debt burdens on state governments’ inability, or unwillingness, to adequately fund employee pensions and benefits. Rather than pay for a portion of these benefits during each budgeting period, many states instead opt to contribute to the plans as they come due.
This forces future taxpayers to cover past costs without receiving any benefits or services, IFTA CEO Sheila Weinberg said in a statement.
“If governors and legislatures had truly balanced each state’s budget, no taxpayer’s financial burden would exist,” Weinberg said. “A state budget is not balanced if past costs, including those for employees’ retirement benefits, are pushed into the future.”
Most states are still trying to weather the economic storm brought on by the 2008 financial crisis, which in most cases dramatically lower tax revenues and left public pension plans woefully underfunded.
At the beginning of the fiscal year this month, 42 states and the District of Columbia had closed, or were trying to close, $103 billion in budget shortfalls, according to the centre on Budget and Policy priorities.
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