According to Truth in Accounting, America’s 50 states are collectively carrying $811 billion in debt. This financial burden was highlighted in the group’s latest “State of the States” report, which shows that state governments ended fiscal year 2023 with $2.9 trillion in debt but only $2.1 trillion in assets. The shortfall will eventually require taxpayer intervention if states cannot address their fiscal gaps.
Twenty-seven states currently have unbalanced budgets, referred to as “taxpayer burdens.” These states would each need to collect around $900 from every resident to balance their books. Massachusetts, New Jersey, Illinois, and Connecticut, which require more than $25,000 per person, received failing grades in the report.
Meanwhile, 23 states earned a “taxpayer surplus” rating, meaning they have sufficient funds to cover debts and even return some to taxpayers. North Dakota, Alaska, Wyoming, and Utah have surpluses over $10,000 per person, earning them “A” ratings from Truth in Accounting.
A major contributor to state debt is unfunded pensions. States owe $840 billion for pensions promised to workers like teachers, firefighters, and police officers. However, they’ve saved just 70% of what’s needed. Additionally, states owe $493 billion in healthcare benefits for retirees, yet have saved only 14% of this amount.
Truth in Accounting criticized some states for diverting pension and benefit funds to cover other programs or keep taxes low, a practice they compared to “charging earned benefits to a credit card.” The report urges states to take a transparent approach to their finances and work toward balancing their budgets without using accounting tricks.
