State Budget
Solutions | by Cory Eucalitto |
October 2, 2012
State Budget
Solutions' third annual State Debt Report released
in August showed that together, state governments together face a crushing debt
of more than $4 trillion. This report examines state debt on a per capita basis
and reveals that state debt amounts to $13,425 for every man, woman and child
in America. The debt total equals $37,486 for every private sector worker. It
is almost a third of private sector Gross
State Product.
Those
numbers illustrate that, without serious and immediate reforms, lawmakers will
eventually have little choice but to drastically raise
taxes and slash services. This updated report examines state debt as it relates
to the individuals and families who will ultimately bear that burden.
This report
calculates total state debt per capita, per private sector employee, and as a
percentage of private sector gross state product
(GSP). In each of the three categories, Hawaii, New Jersey, and Alaska are among states with the five largest
debt figures. At the other end of the spectrum, Nebraska has the lowest total in each of the
areas.
The results
The largest
per capita debt figure for all fifty states is Alaska, where each person's share of their
state's debt stands at $31,141. New Jersey, Hawaii, Connecticut, and Illinois make up the top five states with the
highest per capita share of the state debt.
Nebraska, on
the other hand, has the lowest total debt per capita at just $4,249 for each resident.
Tennessee, Indiana, Florida, and Idaho round out the lowest five debt levels per
capita.
Private
sector workers are at increased risk as they are the ultimate tax base for
reducing state debt. Using figures from the U.S.
Bureau of Labor Statistics, State Budget Solutions determined that Hawaii has the largest debt per private sector worker at
$83,815, followed by Alaska, New
Jersey, Connecticut, and New Mexico. Nebraska again has the lowest total,
with $9,829 in debt for each private sector employee. Indiana, Tennessee, North Dakota, and South Dakota follow.
State Budget
Solutions also calculated state debt as a percentage of private sector GSP. Hawaii's debt stands at 79.21% of its entire
private sector GSP, the highest percentage of the 50 states. New Jersey is again right behind with its
debt representing 59.69% of private sector GSP. Ohio, New Mexico, and Alaska constitute the rest of the top five.
Nebraska, Tennessee, Indiana, North Dakota, and Virginia have the lowest debts as a percentage of
private GSP.
Takeaways
When viewed
in absolute terms, high levels of respective state debt could perhaps be
dismissed as merely a product of a state's large population. Indeed, four of
the five states with the largest total debts were among the five most populated
states. However, a state's economic strength is an effective measure of its
capacity to repay. This report shows the state debt on an individual basis, not
merely a population basis. Many of the states with large populations that had
the largest overall debt figures also had high per capita debts when compared
with other states. This study shows that state debt cannot be explained away
solely as a function of population.
For example,
California, Illinois, and New Jersey have the first, fourth, and fifth
largest overall state debts. All are similarly present among the 10 largest
debts per capita and per private sector employee. New York, which has the
second largest total debt, has the twelfth largest debt per capita. Of all
states, New Jersey
stands out for its high levels of total debt, debt per capita, debt per private
sector employee and debt to private GSP.
In the
original report, California
showed a total debt that far eclipsed that of other states. Its total of nearly
$618 billion was more than double that New
York, its closest competitor. This new view does
change California's
standing among other states, but not radically. It has the eighth largest state
debt per private sector worker, ninth largest debt per capita, and sixteenth
largest debt to private GSP ratio.
Small
population is not necessarily an indicator of the size of debt per capita or
private sector employee. Nebraska, Idaho, South Dakota, North Dakota, Arkansas,
Utah, Vermont, and Kansas
are all states within the bottom twenty of both state debt per capita and per
private sector employee. Each is also among the twenty lowest populated states.
Hawaii and Alaska, states with smaller populations, have among the highest debt
per capita and debt per private sector employee totals.
Sources
State Budget
Solutions' state debt figures provide a comprehensive view of state
obligations. They include general primary government debt, fiscal year budget
gaps, outstanding unemployment trust fund loans, unfunded other post employment benefit liabilities, and market-valued unfunded
public pension liabilities.
Original
total debt figures can be found in State Budget Solutions' third annual State Debt Report. See the spreadsheet below for
calculations of debt per capita, per private sector worker and as a percentage
of GSP. Population data is from the United States Census Bureau July
2011 state-by-state estimate. Private sector employee data is from Bureau of
Labor Statistics for the month of July, 2012. State Gross Domestic Product for
private industries is reported by the Bureau of Economic Analysis.
Find the
spreadsheet with this year's data for all 50 states here.
For last
year's State Budget Solutions study of state debt per capita, state debt per
private sector worker and a a percentage of GSP,
click here.
Click here to
view graphs and report: http://www.statebudgetsolutions.org/publications/detail/state-debt-more-than-37000-per-private-worker-13000-per-capita
Sources
Outstanding
debt figures were obtained from the "Ratio of outstanding debt by
type" section of each state's Comprehensive Annual Financial Report.
Figures were taken from the most recent fiscal year's CAFR (2011). Unemployment
trust fund loan figures are available from the National Conference of State Legislatures. The Center on Budget and Policy Priorities provides
annual fiscal year budget gap details. Other Post Employment Benefit
liabilities and Pew pension liabilities come from "The Widening Gap Update," published by the Pew Center
on the States in June 2012. The American Enterprise Institute's pension
liability figures were drawn from "The Market Value of Public-Sector Pension Deficits"
by Andrew G. Biggs of the American Enterprise Institute released in April 2010.
State-by-state unfunded liabilities can be found in "Just How Big Are Public Pension Liabilities?"
by Bryan Leonard of State Budget Solutions, published on March 3, 2011.
*The report
has been updated to reflect a change in New
Jersey's outstanding debt total. The figure
originally reported included a combined $24,358,719 that the state lists as Net
Other Post Employment Benefit Obligations and Net Pension Obligations. That
total may already be included as OPEB UAAL and Pension UAAL in this report. The
updated report reads $40,690,769 for New
Jersey's outstanding debt as posted in the state's
Comprehensive Annual Financial Report.