(The Center Square) — Maryland was found to be the 11th-most indebted state between 2020 and 2022, despite its small size, according to a recent study.
The largest states were among the leading states in total debt from fiscal year 2020 to 2022, according to the Reason Foundation, a libertarian think tank. Still, there wasn’t a perfect correlation between states’ population size and debt burden.
With about 39 million residents, California is the largest state by about 9 million, according to Britannica. It also had the greatest debt during that two-year period – more than double that of the next four most indebted states at nearly $500 billion.
However, of the top 10 states with the most debt, Illinois, New York, New Jersey, Massachusetts, Connecticut and Washington all ranked higher in total liabilities than they do by population.
Maryland was no different. It ranks 19th among the states for population with over 6 million people but 11th for debt, with total liabilities exceeding $60 million, according to Reason.
It fell to 14th, however, when comparing total liabilities per capita. If states’ total liabilities were distributed evenly amongst their populations, Connecticut’s residents would owe over $27,000 in liabilities per person; Maryland residents would owe $9,773 per capita.
Research Director at the Reason Foundation Geoffrey Lawrence explained the reasons behind Maryland’s outcome in an email to The Center Square. Unfunded pensions and other post-employment benefits liabilities, such as retiree healthcare and other non-pension benefits, comprised large portions of state liabilities.
“Like other states, Maryland benefitted from rapid investment returns in its fiduciary accounts as the stock market rose rapidly following the pandemic. This caused the unfunded portion of the pension and retiree health care benefits the state has promised to employees to decline by $9.4 billion between 2020 and 2022,” Lawrence said. “However, the state took on other forms of new debt, so its total liabilities only declined by $5.2 billion–moving from $65.6 billion to $60.4 billion.”
Baltimore fared worse among the nation’s 100 largest cities. It had almost $9 billion in total liabilities from 2020 to 2022, equating to over $15,000 per capita – the sixth highest debt per capita after New York, the District of Columbia, Chicago, Atlanta and Yonkers, N.Y.
Lawrence said the city has made some positive strides despite such a poor ranking in the last few years.
“This represents a slight improvement since 2020 as the city has worked hard to pay down what it owes to employees for their health care benefits in retirement. The city simultaneously cut spending by nearly $1,000 per capita between 2020 and 2022, even as revenues increased. As a result, the city’s overall financial condition is improving. City leaders should continue along this path,” Lawrence said.
Baltimore County, which surrounds but does not include the independent city of Baltimore, had the 12th highest debt among the 100 most populous counties, with close to $9 billion in total liabilities or over $10,000 per person, in addition to what residents would owe toward state or other municipal debts. Prince George’s and Montgomery counties ranked 15th and 20th, owing over $8 billion and $6.5 billion respectively.
“Baltimore and Prince George’s Counties each owe substantially more in debt than the total value of their assets, including all buildings, roads and other infrastructure,” Lawrence told The Center Square. “Baltimore County owes 37.5% more than all its assets are worth. Prince George’s County owes 44.1% more than the value of its assets. These counties also barely break even between revenue and current spending, so after servicing their debt obligations, these counties’ free cash flow is deeply negative.”
