Financial State of the States 2026
from Truth in Accounting, October, 2026
Our seventeenth annual Financial State of the States (FSOS) report provides a comprehensive analysis of the fiscal health of all 50 states. At the end of fiscal year 2025, 24 states did not have enough money to pay their bills.
HAWAII’S FINANCIAL BREAKDOWN
- Money Needed to Pay Bills: $2.3B
- Taxpayer Burden: $4,500
- RANK: 32 of 50
- FINANCIAL GRADE: C
In 2025, Hawaii's financial situation* improved, but it still didn't have enough money to pay all of its bills and needed $2.3 billion to fill the gap. That means each taxpayer would have to contribute $4,500 to help pay off the state’s debt. As a result, Hawaii earned a “C” grade from Truth in Accounting.
Hawaii's financial position improved significantly in fiscal year 2025, with revenues exceeding expenses. Taxes accounted for 54.2 percent of total revenues, while grants and contributions, including federal aid, represented 27.9 percent. Despite this progress, the state continued to face substantial long-term obligations related to unfunded pension and retiree health care liabilities. The Employees’ Retirement System of Hawaii has not released updated 2025 financial reports, limiting transparency and public trust while hindering effective oversight of the state’s pension plans.
Hawaii received approximately $6.6 billion in federal grants, which represented 27 percent of its revenue. The federal government mandates that entities receiving significant federal funds undergo a Single Audit. These audits are intended to be the taxpayers' first line of defense against potential fraud and abuse. Auditors found that Hawaii relies heavily on audit corrections to produce accurate financial statements year over year. The audit also found technology issues, untimely distribution of federal grant money, and staffing shortages-revealing weaknesses in systemic control and coordination across multiple agencies.
read … Financial-State-of-the-States-2026.pdf
*The data in this report is derived from Hawaii’s audited 2025 Annual Comprehensive Financial Report and its retirement systems' reports. To explore prior years or compare financial, demographic, and economic data across other states and cities, visit Data-Z.org.
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