Another Year Older and Deeper in Debt

whirlpoolAggregate debt of the 50 state governments totaled $4.17 trillion in 2012, according to a new tally by State Budget Solutions, which includes bonded indebtedness, unemployment trust fund loans, budget gaps, pension liabilities and other unfunded retirement benefits.

That compares to roughly $17 trillion owed by the federal government. But it does not include indebtedness and unfunded liabilities of local government or quasi-independent authorities. Insofar as state and local government finances are intertwined, the report gives only a partial snapshot of the financial condition of the 50 states.

California led the list with $617 billion in total indebtedness, which isn’t surprising, given the fact that it is also the most populous state in the union. Vermont, at the opposite end of the population scale, sports the lowest debt, with $5.8 billion. (See complete rankings here.)

Here are the numbers for Virginia:

$ 6.01  billion outstanding debt
$      0  billion unemployment trust fund loans
$ 0.15  billion FY 2103 budget gap
$21.25 billion unfunded pension liabilities
$ 4.37 billion unfunded retirement liabilities
$31.8 billion total debt

Editorial asides: The data is useful but State Budget Solutions (SBS) could have made it even more useful if it had calculated indebtedness per capita and/or as a percentage of GDP. Such an easy step! Why not do it?

Also, it would be helpful to compare state performance over the three years that SBS had conducted this survey. Virginia enacted major pension reforms a year-and-a-half ago. Inquisitive minds would like to know what difference they made. There is no sense either of whether the 50 states’ collective financial condition is improving or deteriorating. I can’t even find last year’s report on the Web!

Meanwhile, here’s a worthy project for a think tank like the Thomas Jefferson Institute for Public Policy or the Commonwealth Institute: Conduct a similar exercise for Virginia and its local governments.

– JAB

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