Dear Reader,
Twenty-seven states. More than half the country. And they’re broke. That’s the headline. But the real story? It’s buried in the numbers. Truth in Accounting’s Financial State of the States 2024 Report lays it all out. They dig through the dense, confusing financial reports—the ACFRs—to give you the truth. And it’s not pretty.
- 27 States Are in Trouble: Nearly half the country can’t cover their bills, leaving taxpayers on the hook.
- $1.3 Trillion in Hidden Debt: States are hiding pension and retiree health care shortfalls, piling up debt for future generations.
- The Clock is Ticking: With rising inflation and shrinking Covid relief, this debt crisis could explode—leaving taxpayers to pick up the pieces.
Right now, these 27 states can’t pay their bills. You might ask, how can they get away with that? Simple. They fudge the numbers. They “balance” their budgets by leaving out key costs, like pension obligations and retiree healthcare. But those bills don’t disappear. They just get kicked down the road—straight to you, the taxpayer.
Truth in Accounting has a term for this: Taxpayer Burden™. It’s what you, personally, would need to fork over to cover your state’s debt. It’s staggering. And it’s getting worse.
Let’s break it down. The states owe $2.9 trillion. But they’ve only got $2.1 trillion in assets. That leaves an $811 billion shortfall. The worst part? A huge chunk of this debt—$1.3 trillion—comes from underfunded pensions and retiree health care. States promised their workers these benefits but didn’t set aside enough money to pay for them.
Now, they’re scrambling. They hide these massive obligations in the fine print of their financial reports. They claim their budgets are balanced, but they’re really piling up debt.
And the situation is dire.
In 2023, 27 states couldn’t meet their financial obligations. But they’re still claiming to have balanced budgets. How? By excluding future pension payments and deferring costs like infrastructure maintenance. It’s smoke and mirrors, and it leaves future taxpayers—your kids, your grandkids—holding the bag.
The numbers from Truth in Accounting’s report tell the real story. States can’t keep pretending everything’s fine. The overall debt keeps piling up, year after year.
And here’s the scary part: inflation is rising, and economic growth is slowing down. The Covid relief money is drying up. These states are running out of tricks to balance the books.
To make matters worse, the stock market—another lifeline—won’t save them forever. In 2024, strong market performance made some state pension funds look healthier than they are. But those gains are on paper, not in reality. And when the market dips, the true extent of the debt will hit hard.
Truth in Accounting says it clearly: states need to stop playing games. They need to fund their pensions properly, cut the fat, and use full accrual accounting (FACT-based accounting). That’s the only way to get a real handle on the numbers. It’s the only way to avoid passing even more debt onto future taxpayers.
But will the states listen? Probably not.
The debt’s not going away. And eventually, someone’s going to have to pay. That someone is you.
Freedom Financial News
