Forget about the national debt for a moment and discover another troubling monetary situation. A recent report from State Budget Solutions discloses that the total debt facing U.S. state governments now stands at $5.1 trillion. That is equal to about $16,180 for each state resident.
That amounts to one-third of annual gross state product on average or 469 percent of all fiscal year state, general and other fund revenues.
How can this be?
The report said, "Since 2010, SBS has conducted a comprehensive examination of debts facing the 50 state governments. These reports have repeatedly found trillions in combined debt that stand in stark contrast to officials' proclamations of balanced budgets and belt-tightening."
State debt is comprised of four different factors including:
- Unfunded public pension liabilities
- Outstanding government debt, including bonds and leases
- Unfunded other post-employment benefit liabilities (OPEB), mainly retirees' health benefits
- Outstanding unemployment trust fund loans from the federal government.
Unfunded public pension liabilities far outweigh other liabilities with a $3.9 trillion debt followed by unfunded OPEB liabilities at $528.7 billion and unemployment trust fund loans total $19.9 billion, according to SBS.
California, New York, Texas, Illinois and Ohio are the top five debt-ridden states in that order.
The only four states under the debt of $10 billion are South Dakota, Vermont, North Dakota and Wyoming with their obviously small populations
SBS observes in their report, "Over time, state debt will exact a toll on state budgets. Money once expected to fund vital services like education and healthcare will have to be redirected to debt service, increased contributions to public pension systems, and more."
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