25 states were unable to cover all their financial obligations at the end of fiscal year 2024, which for most states ended 30 June, per the annual State of the States report. While every state but Vermont mandates a balanced budget, elected officials often exclude certain costs such as future pension obligations and deferred maintenance from their budget calculations. "This practice essentially shifts these financial responsibilities onto future taxpayers, leaving them to cover the expenses that should have been accounted for in the current budget," the Truth in Accounting report states. In total, calculated states hold $2.2 trillion in assets and $2.9 trillion in debts. At $832 billion, unfunded pension obligations are the largest driver of state debts. The top "sinkhole states" are New Jersey, Connecticut, Illinois, Massachusetts, and California. The top surplus states are North Dakota, Alaska, Wyoming, Utah, and Tennessee.
Rather than funding promises of pension payouts and retiree health care, some elected officials in those states have used those funds to keep taxes low and pay for politically popular programs. That can make a state budget appear balanced, though its debt continues to increase " the equivalent of charging "a credit card without having the money to pay off the debt." The report grades the finances of each state, including a look at its total assets, unfunded liabilities and debts. It also calculates the overall costs to each resident: Kentucky, for example, would need $11,500 from each of its taxpayers to pay all of its outstanding bills. In 2026 after the BBB' takes effect, individual states will be making up for federal shortfalls in order to fund SNAP, food banks, or homeless shelters. Rural hospitals will be closing thanks to cuts in Medicaid. Americans will be paying more for drugs thanks to Dummkopf Trumpf's tariffs, as well as their health insurance. Inexplicably, 2026 might be a year of painful austerity for many Americans, even though the US is one of the wealthiest countries in the world.
