in Houston, Texas
Texas third in total state debt, low by per-capita measure; across all the states, underfunded liability shoots to $3.5 trillion
Tuesday, Aug 28, 2012, 11:54AM CST
By Curt Olson
debt

A new study by State Budget Solutions places Texas third nationwide in total state debt with $287 billion, behind California and New York.

New Jersey and Illinois joined the top three, rounding out the same five states with the highest total debt from a year ago, the study states. The states with the lowest total state debt are Vermont, North Dakota, South Dakota, Wyoming and Nebraska.

Texas’ third-place rank shouldn’t surprise taxpayers, given the state’s rapid growth in the past decade. The state had more than 25.1 million residents in 2010 compared to 20.9 million in 2000, according to Census data. Those extra 4 million people and change triggered the construction of roads, water and wastewater treatment plants, among other infrastructure.

When population is factored in, the picture in Texas improves.

The Washington, D.C.-based Tax Foundation reported that Texas has a debt per capita of $1,679, ranking 45th in the nation, according to figures for 2010, the most recent year for which data is available. That compares to New York’s nearly $6,700 per resident and California’s more than $4,000 per resident.

Texas’ rank for total debt did not surprise Chuck DeVore, vice president for communications at the Austin-based Texas Public Policy Foundation. He said fiscal policy analysts at the free market think tank have greater concern about local government debt.

“We would like to see limits on debt, especially at the local level,” DeVore said, noting local government debt boosts property taxes, with multiple public entities having power to raise property taxes.

State Comptroller Susan Combs reported last week that between 1992 and 2010 Texas had an additional 500 special purpose districts created, accounting for more than 87 percent of the growth in public entities levying property taxes.

State Budget Solutions reports total state debt nationwide dropped from $4.24 trillion to $4.19 trillion, which study author Cory Eucalitto attributes to reductions in unemployment trust fund loans and fiscal year budget gap totals. He estimated Texas’s fiscal year 2013 budget gap at $9 billion. Texas had no unemployment trust fund loans.

“Fiscal year budget gaps alone fell by more than half. The lack of a subsequent, sizable drop in total state debt, however, shows that the cause of state debt is a systemic one requiring far more than annual budget balancing to eliminate,” the State Budget Solution report states.

The State Budget Solutions study that Eucalitto released early Tuesday identifies the growing problem with pension debt and the way states account for it.

The study shows many consider the aggregate pension debt for the 50 states to be about $760 billion. The study says this understates underfunded pension costs by $2.1 trillion, a number accepted by the credit-rating firm Moody’s. New rules expected this fall from Moody’s and the Governmental Account Standards Board will almost certainly paint a bleaker financial picture for pensions across the country.

Across the states, the underfunded liability increases to about $3.5 trillion when health care benefits for public employee retirees are added to the $2.2 trillion amount by which pensions are underfunded.

***
Contact Curt Olson at curt@texaswatchdog.org or 512-557-3800. Follow him on Twitter @olson_curt.

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Photo of debt by flickr user Images_of_Money, used via a Creative Commons license.

Comments
Adrian Heath
Tuesday, 08/28/2012 - 11:07PM

Curt, No offense Sir. I have been sounding the alarm on local debt for some time. Texas has the Second Highest combined State & Local Debt per capita.

Buy a calculator. $287 B divided by $25.1 M = $11,434.

Frankly I'm alarmed the the guy from TPPF did not correct the miscalculation.

Read my testimony here

http://americansforprosperity.org/files/Local_Gov_Debt_11_8_10_ADH_testimony.pdf

http://www.senate.state.tx.us/75r/senate/commit/c640/wtpdf/20100201-AdrianDavidHeath.pdf

http://www.house.state.tx.us/_media/pdf/committees/reports/81interim/House-Committee-on-County-Affairs-Interim-Report-2010.pdf

Read the Texas Debt Affordability Study here http://www.brb.state.tx.us/pub/bfo/DAS2012.pdf

kt
Wednesday, 08/29/2012 - 08:59PM

Not surprising given that it is run by Republicans. I used to be a Republican in the days of Goldwater and until the party was taken over by crazy stupid people. Look at the states that are at the bottom. Most are run by the Republicans. Look at most of the best run, the ones that are most solvent, they are run by Republicans -- not so much. The Republicans claim fiscal conservatism and prudence, but the proof is in the bottom line. Wherever they control, be it the governors mansion or the White House, they leave red ink in their wake.

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