(The Center Square) – A new report found Minnesota ranks 14th nationwide for fiscal responsibility.
Financial watchdog Truth in Accounting released its 14th annual Financial State of the States report, which provides a comprehensive analysis of the fiscal health of all 50 states based on the latest available data.
The report found Minnesota has $40.2 billion to pay $31.3 billion of bills, leaving an $8.9 billion surplus, which breaks down to $4,300 per taxpayer.
TIA gives any government with a taxpayer surplus between $1 and $9,999 a “B” grade.
“We are happy to see state debt decreasing but states should not count on temporary federal funding and increased tax collections to fix their long-term problems,” TIA CEO Sheila Weinberg said in a statement. “Elected officials need to include the true costs of government in their budget calculations, including accruing retirement benefits so that they can make real progress towards a healthier financial future.”
According to the report, at the end of fiscal year 2022, 28 states didn’t have enough money to pay their bills. In total, debt among the states was $938.6 billion, down from $1.2 trillion at the end of fiscal year 2021.
Minnesota saw improvements in its fiscal condition predominantly due to increased tax collection as the state recovered from the depressed economy during the pandemic.
Like many states, Minnesota’s economic condition improved due to federal funding for COVID relief and increased tax collections attributed to taxpayers’ pent-up tourism and purchasing demands. However, these increases may be transitory as federal COVID funds dissipate and tax collections return to more stabilized levels.
Additional market declines after the state’s fiscal year-end most likely caused decreases in the value of pension systems’ assets, which could cause an increase in its unfunded pension promises.
Every state, except Vermont, has a balanced budget requirement. This means that to balance the budget – as the law requires in 49 states -states shouldn’t carry any debt.
When states do not have enough money to pay their bills, TIA takes the money needed to pay bills and divides it by the estimated number of state taxpayers. The resulting number is a Taxpayer Burden™. Conversely, a Taxpayer Surplus™ is the amount of money left over after all of a state’s bills are paid, divided by the estimated number of taxpayers in the state.
The majority of state debt comes from retirement plans, such as pension and retiree health care benefits. On average, the 50 states had only set aside 71 cents for every dollar of promised benefits to fund pensions and 11 cents for every dollar to fund retiree health care promises.