It’s not just the federal government running massive deficits and piling up enormous levels of debt. Thirty-nine US states don’t have enough money to pay all of their bills.
That was the grim conclusion of Truth in Accounting’s annual Financial State of the States report.
The report summarizes a comprehensive analysis surveying the fiscal health of the 50 states prior to the coronavirus pandemic.
Total debt for all states combined totaled $1.4 trillion at the end of fiscal 2019. This does not include debt related to capital assets.
“Most of the states were ill-prepared for any crisis, much less one as serious as what we are currently facing.”
Ironically, 49 states require balanced budgets by law. As the report explains, “This means that to balance the budget … elected officials have not included the true costs of the government in their budget calculations and have pushed costs onto future taxpayers.”
The vast majority of state debt comes from unfunded retirement benefit obligations. This includes pension plans and retiree healthcare liabilities. Pension debt accounts for $855 billion and other post-employment benefits (OPEB) totaled $617 billion at the end of FY 2019.
The coronavirus pandemic and the accompanying government-imposed economic shutdowns have only exacerbated financial problems at the state level. The report estimates the 50 states could lose $397 billion in revenue. – READ MORE
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