(The Center Square) – A new Reason Foundation report pegs California as the state with the nation’s highest debt.
The report found that the California state government carries more debt than any other state with $497 billion in liability. The findings stem from 2023, the most recent year for which complete data was available, according to the Reason Foundation, a think tank with offices in Washington, D.C., and Los Angeles.
California’s state government debt pencils out to about $12,500 per Californian, the report found. However, if local government and public school district debt is added to the mix, the state’s total government debt jumps to more than $1 trillion – making each Californian’s share more than $27,000.
“The state and local governments in California carries about $20,000 of long-term debt per resident in the state ,” Mariana Trujillo, managing director of government finance at Reason Foundation and the report’s lead author, told The Center Square. “That’s a lot of money that has only grown and is expected to only grow unless sustainable reforms and reasonable compromises are reached.”
Much of the state’s burden stems from long-term debt, defined in the report as debt that is due in more than a year. That includes bonds, loans and notes, unfunded pension liabilities, unfunded retiree health care benefits and accrued leave payouts, according to the report. The report also goes on to explain that California’s unpaid bond debt totals $111.8 billion, making California the state with the most outstanding bond debt.
The report comes months after the California Legislature passed a record $325 billion preliminary budget, much to the chagrin of Republican lawmakers who thought the budget the legislature passed in June was “destined for despair.”
“This budget continues to overspend while hoping for a growth in revenue instead of cautiously preparing for the worst,” Sen. Roger Niello, R-Fair Oaks, told The Center Square in June.
Spending is up in California 50 percent per capita since 2019, amounting to an increase of about $106.3 billion, The Center Square previously reported.
Other states with high state government debt that neared the top of the list included New York, at $233.27 billion; Illinois, at $222.82 billion; Texas, at $216.93 billion, New Jersey, at $213.35 billion and Massachusetts, at $120.09 billion. Elsewhere in the West, Washington state had the eighth highest amount of debt with $97 billion, which rises to $143 billion when school districts and local governments are added.
“To do proper reform, that would ensure proper and full funding of public employee retirement benefits is a great step, and to curb expenses and better align expenses to revenues and prioritize the essential programs would be the next step in making strides to reduce the necessity to keep issuing bonds every year,” Trujillo told The Center Square.
Members of the California Assembly and Senate who sit on budget and financial committees were unavailable to comment to The Center Square Friday. Also unavailable were representatives from the California Department of Finance, the Public Employees Retirement System, the California Debt and Investment Advisory Commission, and the California Debt Limit Allocation Committee.
