State debt, by the map: How does your state compare?
(Truth in Accounting)
All 50 states’ governments manage their own taxes and budgets in parallel with the federal government. Just like the well-known national debt at the federal level, many states have also borrowed money to plug their current budget holes. There are a lot more states than you might think with budget’s in the red, and they’re not necessarily in the places you would think. Living in one of these heavily-indebted states could open you up to future tax increases or commiserate cuts in government spending.
To determine the states rankings, we start with 50 obscure documents known as CAFR’s, or Comprehensive Annual Financial Reports, on file in legislatures across the country. Many states are months behind with their financial accounting, so the most recent data available covers fiscal year 2017. This data can tell us how much money each state has in its coffers, or how much it needs to cover all its bills.
Interestingly, the Mississippi River is a strong geographic boundary line between prosperity and debt for state governments. The five wealthiest states can be found on its western side of the Continental Divide, and the five worst are located to the east. The latest numbers also show that only 10 states out of 50 have enough money to pay off all their accumulated bills. Not one of these states is located along the Eastern Seaboard. Of the 10 states with a Taxpayer Surplus, seven have Republican governors, while Alaska has an independent, and only Oregon is run by a Democrat.
It’s interesting to see how the state debt map differs from our traditional stereotypes of wealth and prosperity in America. States like Maryland, New Jersey, and Connecticut have some of the highest per capita incomes in the country. But a comparison of their state government’s fortunes shows a starkly different picture. Maryland boasts a median household income of $73,000, but lawmakers in Annapolis have racked up $16,000 in bills for each taxpayer in the state. The median New Jersey household brings home $68,000, but they’re also on the hook for a staggering $61,400 – each taxpayer’s share of the Garden State’s bills. Connecticut has a median household income of $75,900, and another discordant taxpayer burden of $53,400.
The surprises don’t end on the East Coast. Out West, you find median household incomes on the lower end of the national spectrum, yet states are able to maintain robust Taxpayer Surpluses. North Dakota, for example, could hypothetically write each of its taxpayers a $24,900 check without borrowing any further money.
How is it possible that states with wealthy tax bases have accumulated such hefty debts? Where did the traditionally low-income states come up with eye popping surpluses? Part of the story could lie in economic activity that doesn’t get measured by the Census figures. The five largest taxpayer surplus states also sit atop significant energy and mineral wealth. The shale oil boom has produced an ocean of tax revenue, something unavailable to East Coast states.
Many of the worse-off states are also studded with big cities that tend to come with a lot of financial red ink. Older American cities tend to be worse off than their younger, Western counterparts. They also often come with entrenched constituencies: unions, pensions, and expensive services that are politically easier to maintain than move back into sustainability.
How does your state compare?
No comments:
Post a Comment