Vermont boasts the smallest debt of any state in the nation, in a new report which shows that debt largely follows population. Vermont has the second smallest population, next to Wyoming. Vermont is $5.8 billion in debt.
For the third consecutive year, State Budget Solutions examined state debt and calculated the total amount of debt that each state faces. This year's report shows that aggregate debt across the 50 states amounted to $4.19 trillion. State debt calculations include a state's regular debt, the fiscal year 2013 budget gap, outstanding unemployment trust fund loans, unfunded other post employment benefit liabilities, and the state's unfunded pension liabilities. View the data spreadsheethere, and scroll down for data on all 50 states.
The best and the worst
California again trumped other states with a $617 billion debt. California's debt is more than twice the size of New York's state debt, and New York has the second largest total debt burden in the nation. Texas, New Jersey, and Illinois rounded out the top five states with the most debt. Although New York and Texas moved up one and two spots, respectively, the states with the five largest debts remained unchanged from last year's report.
Vermont has the least amount of debt of all fifty states with a $5.8 billion state debt. North Dakota, South Dakota, Wyoming, and Nebraska follow Vermont with the smallest debt burdens in the country.
States
Highest Total State Debt (in thousands)
States
Lowest Total State Debt (in thousands)
California
$617,620,709
Vermont
$5,846,189
New York
$300,066,114
North Dakota
$6,116,162
Texas
$286,999,196
South Dakota
$6,536,680
New Jersey
$282,393,641
Wyoming
$6,927,767
Illinois
4271,111,148
Nebraska
$7,829,117
Overall, total state debt fell slightly when compared to last year's report, from $4.24 trillion to $4.19 trillion. The decrease is attributable to reductions in unemployment trust fund loans and fiscal year budget gap totals. Fiscal year budget gaps alone fell by more than half. The lack of a subsequent, sizable drop in total state debt, however, shows that the cause of state debt is a systemic one requiring far more than annual budget balancing to eliminate.
Unfunded pension liabilities
Market-valued unfunded public pension liabilities make up more than half of all state debt, accounting for $2.8 trillion of the total. These market-valued pension liabilities provide a realistic view of the money owed to public pension systems as a result of years of skipped payments, borrowed funds, and inaccurate discount rate assumptions.
In comparison to market-valued liabilities, traditionally calculated unfunded pension liabilities hide the true enormity of state debt obligations. Unfunded liability figures from the Pew Center on the States rely on much of the same data that states use to continually underfund their pension systems. While market-valued liabilities total $2.8 trillion, the latest traditionally calculated figures total only $760 billion in unfunded pension liabilities. Total state debt using these figures is still over $2 trillion, but a comprehensive view of state debt without accurately assessed public pension liabilities disguises the problem to the tune of as much as $2.1 trillion.
States and other sources have not yet released market value pension liability figures for fiscal year 2011. Therefore, this year's report uses the same market-valued pension liability figures first published in 2010 and used in the previous year's report. Even so, growth in traditionally calculated unfunded pension liability totals indicates that were updated numbers available, aggregate state debt would have continued to increase.
Other causes of state debt
Outstanding debt and other post employment benefit liabilities each contribute approximately $600 billion to total debt. Outstanding debt includes bonds, leases, and other regularly assessed components of primary government debt. Post employment benefits include health care and other non-pension benefit guarantees owed to public employees.
The final two items included in the total state debt calculation are outstanding unemployment trust fund loans and fiscal year 2013 budget gaps. Unemployment trust fund loans represent payments due to the federal government, often to cover rising unemployment costs as a result of the recent economic downturn. The fiscal year 2013 budget gap is the gap between revenues and expenditures in each state's most recent budget year. Both of these figures declined from last year's report; the budget gap total decreased by more than half. However, these totals failed to make a sizable impact on state debt; their totals are dramatically overshadowed by pension liabilities, OPEB liabilities, and outstanding debt.
Taken together, these five figures provide a comprehensive assessment of a state's debt.
Debt Factor
State Total (in thousands)
Outstanding Debt
$631,358,746
Unemployment Trust Fund Loans
$24,617,078
FY 2013 Total Budget Gap
$54,983,000
OPEB UAAL
$627,234,633
AEI Pension UAAL
$2,860,967,581
Total State Debt
$4,199,161,038
POPULATION BY STATE, US Census, 2009
State
Number
Rank
United States
307,006,550
(X)
California
36,961,664
1
Texas
24,782,302
2
New York
19,541,453
3
Florida
18,537,969
4
Illinois
12,910,409
5
Pennsylvania
12,604,767
6
Ohio
11,542,645
7
Michigan
9,969,727
8
Georgia
9,829,211
9
North Carolina
9,380,884
10
New Jersey
8,707,739
11
Virginia
7,882,590
12
Washington
6,664,195
13
Arizona
6,595,778
14
Massachusetts
6,593,587
15
Indiana
6,423,113
16
Tennessee
6,296,254
17
Missouri
5,987,580
18
Maryland
5,699,478
19
Wisconsin
5,654,774
20
Minnesota
5,266,214
21
Colorado
5,024,748
22
Alabama
4,708,708
23
South Carolina
4,561,242
24
Louisiana
4,492,076
25
Kentucky
4,314,113
26
Oregon
3,825,657
27
Oklahoma
3,687,050
28
Connecticut
3,518,288
29
Iowa
3,007,856
30
Mississippi
2,951,996
31
Arkansas
2,889,450
32
Kansas
2,818,747
33
Utah
2,784,572
34
Nevada
2,643,085
35
New Mexico
2,009,671
36
West Virginia
1,819,777
37
Nebraska
1,796,619
38
Idaho
1,545,801
39
New Hampshire
1,324,575
40
Maine
1,318,301
41
Hawaii
1,295,178
42
Rhode Island
1,053,209
43
Montana
974,989
44
Delaware
885,122
45
South Dakota
812,383
46
Alaska
698,473
47
North Dakota
646,844
48
Vermont
621,760
49
District of Columbia
599,657
(X)
Wyoming
544,270
50
Read more:http://www.statebudgetsolutions.org/publications/detail/state-budget-sol...
State Budget Solutions| byCory Eucalitto| August 28, 2012