"Rich States" Also Have Debts

From State Data Lab October, 2013

A recent 24/7 Wall Street article recognized 10 states as “rich,” measured by median household income, but how about the debt these states have accumulated on their ‘credit cards?’  Truth in Accounting’s measure of state debt, Taxpayer Burden, is the total amount each taxpayer in each state would owe, after available state assets are tapped, to pay state debts, including bonds, unfunded pensions, and retirement health-care.

The Taxpayer Burden for Hawaii, the 5th “richest state,” is $ 39,900 compared to its median household income of $66,259.  Connecticut, the 4th “richest state,” has a $46,000 taxpayer burden compared to its median household income of $69,667.  New Jersey, the 2nd “richest state,” has a $34,200 taxpayer burden compared to median household income of $69,667.    

That’s not all – the same analysis shows each taxpayer in Bridgeport, CT would owe another $29,600 to right the city’s finances, in addition to the $46,000 each would owe the state.  So the “median household” in Bridgeport, CT would have to shell out a year’s income to pay debts its city and state have accumulated.

Governments have accumulated massive debts off their balance sheets, since reporting conventions allow them to hide pension and retirement health promises from their citizens.  Essentially they are charging the costs of current services to “credit cards” whose balances they will hand to future generations to pay.  Just like credit card balances, these government debts grow, so the claim they can be “paid off over time” is just as fallacious as handing our children the credit card statements while we continue to purchase things.    

Citizens should either pay for current services or accept fewer services, instead of allowing government “credit cards” to accumulate bills their children will have to pay.  Truthful disclosure, available on Truth in Accounting’s web site, shows the size of the problem we’ve given our children.  

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