NCPA - National Center for Policy Analysis

Total State Debt over $4 Trillion

September 4, 2012

Individual state debt continues to be a problem. State Budget Solutions calculated the debt owed by each state. The calculation includes a state's regular debt, the fiscal year 2013 budget gap, outstanding unemployment trust fund loans, other unfunded post-unemployment benefit liabilities, and the state's unfunded pension liability, says Cory Eucalitto, an author and research analyst at State Budget Solutions and Sunshine Review.

  • California's $617 billion debt was more than double the state with the second highest debt.
  • Vermont has the least debt of any state with $5.8 billion in debt.
  • The aggregate debt across all 50 states totals $4.17 trillion this year.
  • This is an improvement over last year's $4.24 trillion total debt.
  • The drop in debt can be attributed to reductions in the unemployment trust fund loans and fiscal year budget gap totals.

Unfunded public pension liabilities are a giant source of state debt concern, making up more than half of all state debt.

  • Unfunded public pension liabilities total $2.8 trillion.
  • This is the result of skipped payments, borrowed funds and inaccurate discount rate assumptions.
  • However, while the market-valued liabilities total $2.8 trillion, states calculated the unfunded pension liabilities at $760 billion as a way to underfund their pensions systems.

While unfunded public pension liabilities play a major factor in state debt, other issues are just as concerning and need to be addressed.

  • Outstanding debt, in the form of bonds, leases and other forms of primary government debt, as well as post-employment benefit liabilities, which include health care and non-pensions benefit guarantees, each contribute $600 billion to the total debt.
  • In addition, outstanding unemployment trust fund loans, which are payments due to the federal government, account for around $24 billion of the total debt.
  • Finally, the fiscal year 2013 budget gap (the gap between revenues and expenditures) totals nearly $55 billion of the total state debt.

Source: Cory Eucalitto, "State Budget Solutions' Third Annual State Debt Report Shows Total State Debt over $4 Trillion," State Budget Solutions, August 28, 2012.


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