Apparently Congress’ bad overspending habit has set a bad example for the State governments as well. Certain state’s financial solvency are in dire straits. The Institute for Truth in Accounting (IFTA) released a study of all 50 states’ assets and liabilities, including states’ pension and retirement healthcare obligations. Together, the states have more than $900 billion in liabilities – or debt – that are not on their balance sheets. Unfortunately, taxpayers’ troubles are only growing because of antiquated accounting and budgeting rules.
IFTA identified five “sinkhole states,” aptly named for their poor financial conditions, and the amount each taxpayer would have to send to its state treasury to cover the states’ debts and overspending. These states are: Connecticut ($49,000), New Jersey ($35,800), Hawaii ($32,700), Illinois ($31,600), and Kentucky ($23,500). The financial hardships these states face are unbelievable; Hawaii watched its unfunded healthcare obligations increase by $3 billion in just one year. Even more unsettling, four of these “sinkhole states” now face larger per-taxpayer burdens compared to last year and, ultimately, are becoming more insolvent each year.
And while the federal government and many states are overspending, the IFTA study found a few states, including Alaska, Wyoming, North Dakota, Utah and Nebraska are being more fiscally responsible, and dubbed them “Sunshine” states.
The study found that the “sunshine states” grow stronger and more solvent each year while their “sinkhole” brethren struggle to stay afloat. So who’s to blame for this massive disparity between states financial capabilities? The study identifies “antiquated government budgeting rules and accounting standards,” but it seems many states have picked up Congress’ bad spending habits.