Fifteen State Governments Earn D Grades for Troubling Financial Health

CHICAGO — Truth in Accounting (TIA), a think tank that analyzes government financial reports, found that 15 state governments had a Taxpayer Burden™ between $5,000 and $20,000 at the end of fiscal year 2020, which earned them  “D” grades for their finances. Taxpayer Burden is a calculation of the state’s unpaid bills divided by the number of taxpayers. The fiscal health for most states worsened during the onset of the pandemic which occurred in this fiscal year. These findings are released today in the twelfth annual Financial State of the States report, which ranks all 50 states by their financial health. The D grade states include the following:

• Ohio | Taxpayer Burden: -$5,400

• Kansas | Taxpayer Burden: -$7,500

• Washington | Taxpayer Burden: -$7,800

• West Virginia | Taxpayer Burden: -$8,100

• Maine | Taxpayer Burden: -$8,200

• Alabama | Taxpayer Burden: -$9,800

• Mississippi | Taxpayer Burden: -$11,500

• Texas | Taxpayer Burden: -$13,100

• Rhode Island | Taxpayer Burden: -$16,100

• Michigan | Taxpayer Burden: -$16,800

• New Mexico | Taxpayer Burden: -$17,000

• Maryland | Taxpayer Burden: -$18,200

• Pennsylvania | Taxpayer Burden: -$18,300

• South Carolina | Taxpayer Burden: -$18,700

• Louisiana | Taxpayer Burden: -$18,700

These 15 states did not have enough money set aside to weather the pandemic. These states received federal assistance from the CARES Act and other COVID-19 related grants which came with stipulations on how the money could be spent. The poor financial health of these states was caused primarily by not properly funding their pension and retiree health care promises for years which places a burden on future taxpayers.

Every state, except Vermont, has a balanced budget requirement. This means that to balance the budget—as is required by law in 49 states—elected officials should include the true costs of the government in their budget calculations.  These financial reports show that they have not done this and have pushed costs onto future taxpayers.

“The beginning of the pandemic hurt state finances,” says Sheila Weinberg, Founder and CEO of TIA. “For many states, investment income decreased dramatically while pension debt increased, which future taxpayers will be on the hook for.”

Across the country, some 39 state governments found themselves in varying degrees of debt. The situation in the worst-off states was dire: Connecticut’s obligations worked out to a Taxpayer Burden of $62,500. New Jersey’s Taxpayer Burden was $58,300, and Illinois’ Taxpayer Burden was $57,000. The average Taxpayer Burden across all 50 states was $9,300, which was $2,000 worse than the prior year.

View this year’s full Financial State of the States report here, and find more in-depth, state-by-state data here.

The Financial State of the States report is an in-depth study of the financial condition of the 50 states. The data for this report was derived from states’ 2020 annual comprehensive financial reports and retirement plans’ reports.

Founded in 2002, Truth in Accounting is dedicated to educating and empowering citizens with understandable, reliable, and transparent government financial information. Sheila Weinberg, founder and CEO, is a Certified Public Accountant with more than 40 years of experience in the field.