Financial State of the States
From Truth in Accounting, September 17, 2015
For the sixth consecutive year, Truth in Accounting (TIA) has completed a comprehensive review of the financial reports of all 50 states to provide citizens with a clear picture of their governments’ financial conditions. Despite an improvement in the economy and financial markets, the amount of bills accumulated by the states has not significantly decreased. States still have almost $1.3 trillion of unfunded debt, accumulated despite balanced budget requirements in 49 of the 50 states.
39 states have dug financial holes, thus creating a “Taxpayer Burden,” which is the amount each taxpayer would have to send to their state’s treasury in order for the state to be debt-free. If state budgets had been truly balanced, no Taxpayer Burden would exist.
Taxpayer Burden is driven by state governments’ use of out-dated accounting policies to calculate budgets and financial reports. States are not held to the same accounting standards as most businesses and publicly traded companies. Therefore, states do not use the proper tools to balance their budgets. In fact, every year many states go even deeper into debt.
TIA has again identified the worst five “Sinkhole” states, those with the highest Taxpayer Burdens.
2014 Taxpayer Burden
- New Jersey -- $52,300
- Connecticut -- $48,600
- Illinois -- $45,000
- Kentucky -- $32,600
- Massachusetts -- $27,400
- Hawaii #6 -- $26,500
TIA also identified the top five “Sunshine” states. Alaska, North Dakota, Wyoming, Utah and South Dakota have a "Taxpayer Surplus." This means these states have enough assets available to pay their bills, including pension and retirees' heath care benefits owed.
2014 Taxpayer Surplus
- Alaska -- $52,300
- N Dakota -- $28,400
- Wyoming -- $22,600
- Utah -- $4,200
- S Dakota -- $4,000
Nationwide, more than $956 billion of promised retirement benefits are not reported on state balance sheets due to out-dated accounting standards.
To bring truth and greater transparency to state budget processes, TIA has developed a budgeting system called “Full Accrual Calculations and Techniques” (FACTbased budgeting). FACT-based budgeting would require governors and legislatures to recognize expenses when incurred regardless of when they are paid.
Data for this report was derived from states’ 2014 financial reports and related retirement plans’ actuarial reports.
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