(Bethany Blankley, The Center Square) State and local government debt surpassed $6.1 trillion in 2023, according to an analysis by Reason Foundation.
The majority of debt was held by state governments, $2.66 trillion; $1.4 trillion by municipalities, $1.27 trillion by school districts, and $757 billion by counties, according to the analysis.
State and local government debt evaluated included both short- and long-term obligations, including $1.5 trillion in public pension obligations, $958 billion for retiree health care obligations, and other debt like bonds that will mature in decades, according to the foundation’s State and Local Government Finance Report.
The report includes a dashboard with drop-down menus to analyze data, allowing users to generate on-demand reports for any government entity, revenue, expense, asset, liability, population and other trends. It includes charts, contextual benchmarks, and per-capita metrics.
Totals include combined liabilities from each state government and each city, town, county and school district in each state. The report includes data for all 50 state governments, 2,317 county governments, 8,630 municipal governments, and 10,408 school districts.
It analyzed fiscal 2023 data from publicly available state and local government financial reports, including annual comprehensive financial reports, it says. The Nevada state government, several cities and counties only had fiscal 2022 data available. The report also states, “data collection at this scale can result in discrepancies.”
It appears to follow a similar review of financial reports produced by the Chicago-based nonprofit Truth in Accounting, which has been publishing reports on the fiscal health of states and cities for nearly two decades.
At the end of fiscal 2024, 25 states were unable to cover all their financial obligations, according to TIA’s 16th annual Financial State of the States report. Half of U.S. states are carrying significant debt burdens, “driven by rising costs, inflation, and ongoing pressure on budgets to fund promised pension benefits. With COVID-related federal funding winding down, states may face more difficulty managing budget pressures without additional financial support,” TIA wrote.
Assets for all 50 states totaled $2.2 trillion; total debt was $2.9 trillion in fiscal 2024, according to the TIA analysis. Combined, the states needed more than $765 billion to cover their expenses at the end of the year, TIA found, The Center Square reported.
California held the most aggregated state and local government debt of more than $1 trillion, according to the Reason analysis. New York ranked second with nearly $798 billion, followed by Texas’ $550 billion, Illinois’ $407 billion and New Jersey’s $310 billion.
Sixteen states had more than $100 billion in state and local government debt: California, New York, Texas, Illinois, New Jersey, Florida, Massachusetts, Pennsylvania, Ohio, Washington, Michigan, Georgia, Maryland, Connecticut, North Carolina and Colorado.
Nearly all states, 48, reported at least $10 billion in combined state and local debt. Only Vermont and South Dakota reported less, $8.8 billion and $5.9 billion, respectively, according to the Reason analysis.
The majority, roughly 80%, of state and local debt is long-term, including “bonds, loans, and notes (41% of the total), unfunded public pension liabilities (32%), unfunded retiree health care benefits (20%), and accrued leave payouts (2%),” according to the Reason analysis.
In 2023, state and local governments reported $4.9 trillion in long-term debt, with five states accounting for more than half the total, according to the Reason analysis.
California reported the most long-term debt of nearly $802 billion, followed by New York’s nearly $634 billion, Texas’ $461 billion, Illinois’ $362 billion and New Jersey’s nearly $289 billion, according to the Reason analysis.
Fourteen states’ long-term state and local debt exceeded $100 billion; 36 states exceeded $20 billion, according to the analysis.
California and Illinois hold the highest pension debt totaling well over $100 billion: nearly $269 billion and $228 billion, respectively, Reason’s analysis shows.
