(The Center Square) – The state of Tennessee has more than enough money to pay its bills, according to the 2025 Financial State of the States report released Thursday by Truth in Accounting.
The state has $25.3 billion to cover its indebtedness, which is just $21.4 billion, according to the report.
The surplus per taxpayer is $10,900, earning the state an A from the organization.
“Tennessee’s overall financial position improved in 2024 thanks to higher cash balances, capital assets, and strong investment return,” the report said. “Business activities also helped with a new water and wastewater fund and better performance in the employment security fund.”
The state’s retirement plan is now 98% funded.
“The state’s pension debt for a closed employee plan was cut in half after better-than-expected returns and extra state contributions Tennessee’s financial management,” the report said.
Tennessee could face some challenges as federal COVID-19 funding dwindles.
“This analysis models a return to 2019 federal grants and contributions, increased only by inflation,” the report said. “If so, Tennessee could see a $4.3 billion reduction in federal funding, representing around 8 percent of projected expenses for the state’s primary government.”
Tennessee’s excellent financial picture makes the state more attractive to businesses, according to Don Bruce, director of the Boyd Center for Business and Economic Research at the University of Tennessee.
“It think it’s probably one of the bright light billboards that we have at the state border that says, ‘Look, we’re taking care of business here,'” Boyd said in an interview with The Center Square. “We’re proud of that. We balance our budget. We have low taxes. We don’t spend what we have to spend. Those are things that people are looking for.”
Tennessee is one of 25 states with enough money to pay its bills, according to the report. It ranked fifth behind North Dakota, Alaska, Wyoming and Utah. The bottom five states are California, Massachusetts, Illinois, Connecticut and New Jersey.
