(The Center Square) – A new report found that 27 states did not have enough money to pay their bills at the end of fiscal year 2023, while Illinois failed to disclose its financial report.
The government finance watchdog Truth in Accounting has released its latest Financial State of the States report. The report found that the majority of state debt can be attributed to their unfunded retirement liabilities, including in Illinois.
Altogether, the debt among the 50 states totaled $2.9 trillion while assets total $2.1 trillion. This debt includes $840 billion in pension liabilities and $492 billion in other post-employment benefits, primarily for retiree health care costs.
Truth in Accounting President and CEO Sheila Weinberg said Illinois did not release its annual financial report in time for the analysis, and as a result, they were forced to use fiscal year 2022 data for Illinois.
“It is kind of like you and me working on our budget without knowing what our credit card balance is,” said Weinberg. “They went ahead and passed the budget without knowing their financial condition of their government.”
Illinois was one of four states that received an “F” grade in the report, which applies to governments with unbalanced budgets and a significant taxpayer burden on its residents. The other states were Massachusetts, Connecticut and New Jersey.
Truth in Accounting says each taxpayer in Illinois would owe $37,000 to pay off the state’s $175.4 billion in pension and retirement medical debt.
Since most state retirement plans are invested in the stock market, Wall Street significantly influences government debt reporting. During strong market performance, the value of pension systems’ investments can make state debt seem lower. However, it’s essential to understand that these are only paper gains, not actual profits, meaning the reduction in debt may not reflect the true financial situation.
“Most states’ financial conditions improved in fiscal year 2023,” said Weinberg. “But the states should focus on bolstering their retirement systems so they can weather market downturns and other economic uncertainties in the future.”
