Some Americans have student debt they'll be paying off for decades. Others have low-paying jobs keeping them in a vicious cycle of credit card debt just to make ends meet. They all are struggling with debt, and it's something whole states are struggling with, too. Fixed pension costs are rising, as more public employees like teachers and firefighters are retiring. These commitments are putting more and more states into the red.
Even if you aren't drawing a state pension, the debt that it fuels can impact you: States will be forced to raise taxes, cut programs, borrow money, and tighten budgets. Thus, it’s essential you know where your state stands.
To assess the damage, GOBankingRates conducted a study examining each state's total liabilities, total assets and the debt ratio between the two. We also determined each state’s total net position --total assets minus total liabilities — to provide the fullest picture possible. A debt ratio of more than 100 percent means a state owes more in liabilities than it has in assets. Click through to find out which states have the least amount of debt and which ones suffer from the most debt.
- Total liabilities: $10.61 billion
- Total assets: $78.69 billion
- Debt ratio: 13.5 percent
Alaska has the largest surplus of all states, with a ratio of liabilities to assets of only 13.5 percent. In absolute numbers, Alaska has the third-highest net position in the U.S. at roughly $68 billion. Alaska is one of seven states with no income tax; it raises money through property taxes on its oil and gas properties.
- Total liabilities: $2.25 billion
- Total assets: $15.12 billion
- Debt ratio: 14.9 percent
With total assets exceeding $15 billion versus liabilities of just $2.25 billion, Nebraska has the second-best state debt ratio in the U.S., and the best in the Midwest Census Region. However, its total net position works out to only about $12.87 billion, below the national median of $15.51 billion.
48. South Dakota
- Total liabilities: $1.17 billion
- Total assets: $7.41 billion
- Debt ratio: 15.8 percent
The Midwest again puts up excellent numbers with South Dakota. Besides the third-best state debt ratio, the state’s roughly $1.17 billion in total liabilities is the lowest amount in the study.
You can calculate your own debt-to-income ratio — the goal is to have one lower than 43 percent.
- Total liabilities: $7.21 billion
- Total assets: $41.08 billion
- Debt ratio: 17.5 percent
Out of the 16 states that make up the South Census Region, Tennessee leads the pack with the best debt ratio of 17.5 percent. The state’s minimal liabilities help contribute to the fifth-highest total net position across all states, at nearly $34 billion.
- Total liabilities: $3.28 billion
- Total assets: $15.37 billion
- Debt ratio: 21.3 percent
Idaho experienced some great financial and economic developments lately. According to its fiscal year 2016 financial report, Idaho’s unemployment rate dropped from the previous year while its labor force increased substantially, helping contribute to the sixth straight year of economic growth. Idaho's total net position falls below the national median, at $12.08 billion.
- Total liabilities: $5.10 billion
- Total assets: $23.09 billion
- Debt ratio: 22.1 percent
Taxes are almost always the biggest and most visible source of state revenue. In Oklahoma, the combined state and average local sales tax rate is higher than the combined income tax burden, according to the Tax Foundation. And compared to the rest of the country, Oklahoma’s combined state and local sales tax rate is the sixth-highest in the U.S., generating nearly $2.5 billion in revenue for fiscal year 2016.
- Total liabilities: $5.56 billion
- Total assets: $24.18 billion
- Debt ratio: 23 percent
Like Idaho, Wyoming falls within the Mountain Census Division. And also like Idaho, Wyoming boasts a low state debt ratio. That could change in the future — Wyoming is heavily dependent on its mineral and energy industry, especially oil, which has been adversely impacted by cheaper oil prices in recent years.
43. North Carolina
- Total liabilities: $15.52 billion
- Total assets: $66.89 billion
- Debt ratio: 23.2 percent
With a debt ratio of less than 25 percent, North Carolina’s finances are in a very healthy position. The state’s total net position is more than $51 billion, the fourth-highest in the country behind Alaska.
- Total liabilities: $7.67 billion
- Total assets: $31.26 billion
- Debt ratio: 24.5 percent
Utah is another Mountain state that leads most U.S. states with its low debt ratio. Several factors contribute to Utah’s good financial situation. According to the 2017 Economic Report to the Governor, unemployment continues to fall while wages continue to rise, and expansion in industrial sectors and tourism have boosted Utah’s job growth over the last year. In fact, a separate GOBankingRates study found that Utah is the best state for unemployed job-seekers.
41. North Dakota
- Total liabilities: $6.95 billion
- Total assets: $26.49 billion
- Debt ratio: 26.2 percent
North Dakota has the third-lowest debt ratio in the Midwest Region, behind Nebraska and South Dakota. North Dakota has been able to keep a healthy balance sheet in recent years. According to a report by the National Association of State Budget Officers, the state reduced its total expenditures by 7.2 percent for fiscal year 2015-2016 compared to 2014-2015.
40. New Mexico
- Total liabilities: $11.16 billion
- Total assets: $37.07 billion
- Debt ratio: 30.1 percent
Comparing debt by state, New Mexico’s debt ratio is clearly towards the lower end of the list. However, this could change if recent state financial trends continue. For example, operating activities caused the primary government’s total net position to drop by $1 billion in fiscal year 2016 versus the previous year.
- Total liabilities: $3.57 billion
- Total assets: $11.67 billion
- Debt ratio: 30.6 percent
Not only do Montana’s assets exceed its liabilities, the state manages to accomplish this without having sales tax as a source of revenue. Property and income taxes fund the state, instead.
- Total liabilities: $13.62 billion
- Total assets: $42.53 billion
- Debt ratio: 32 percent
Missouri boasts a robust total net position of almost $29 billion, which is the eighth-highest in the country. In its 2016 financial report, the state predicted sales tax revenue would begin to grow as residents started to feel more secure in their financial position after recovering from the Great Recession.
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- Total liabilities: $7.96 billion
- Total assets: $24.03 billion
- Debt ratio: 33.1 percent
Total assets are three times as large as total liabilities in Iowa. Iowa possesses a total net position of roughly $16 billion, which is just above the national median.
- Total liabilities: $12.52 billion
- Total assets: $33.44 billion
- Debt ratio: 37.4 percent
Alabama has managed to keep total state revenues ahead of total expenses. One of the principal sources of revenue, behind taxes, are grants and contributions, primarily from the federal government. Additionally, 55 percent of all operating grants and contributions Alabama receives go to Medicaid programs. Alabama is one state that hasn't expanded its Medicaid coverage as part of the Affordable Care Act.
35. South Carolina
- Total liabilities: $10.84 billion
- Total assets: $28.95 billion
- Debt ratio: 37.4 percent
Though it has the same state debt ratio as Alabama, South Carolina ranks lower in our study because of its lower total net position: approximately $18.1 billion to Alabama’s $20.9 billion. Still, South Carolina’s debt ratio is better than the U.S. median.
- Total liabilities: $57.03 billion
- Total assets: $147.97 billion
- Debt ratio: 38.5 percent
Florida’s state debt is kept in check by almost $148 billion in total assets compared to total liabilities of only $57 billion. Subtracting liabilities from assets leaves a total net position close to $91 billion, the second-highest amount in the study.
- Total liabilities: $10.97 billion
- Total assets: $26.41 billion
- Debt ratio: 41.5 percent
Arkansas falls into the West South Central Division alongside Texas and two other states. Arkansas has a lower debt ratio than Texas. But in absolute numbers of liabilities to assets, Arkansas has a net position of roughly $15.4 billion compared to almost $160 billion in Texas.
Arkansas has relatively high government spending. Even though it’s one of the poorest states in the U.S., Arkansas government spending per capita is higher than the states on its borders and in the South, according to a report by the Mercatus Center.
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- Total liabilities: $11.45 billion
- Total assets: $25.40 billion
- Debt ratio: 45.1 percent
Mississippi has managed to keep its state debt in check, increasing its total net position by almost $1 billion from fiscal year 2015 to 2016. On the other hand, Mississippi owes most of this not to savvy policy or booming economics, but to a massive court-ordered award due to the Deepwater Horizon oil spill.
- Total liabilities: $138.42 billion
- Total assets: $297.81 billion
- Debt ratio: 46.5 percent
When looking at debt by state, Texas has the fourth-highest total liabilities in the country. However, the Lone Star State more than makes up for this with its nearly $300 billion in total assets — the highest of all states. When you calculate total net position, Texas’ assets exceed liabilities by almost $160 billion, the biggest surplus in the study.
- Total liabilities: $21.58 billion
- Total assets: $46.18 billion
- Debt ratio: 46.7 percent
Both sides of Arizona's balance sheet are growing. As economic activity picked up from 2015 to 2016, Arizona’s sales and income tax revenues increased by nearly $165 million. At the same time, however, health and welfare expenses rose by about $856 million.
- Total liabilities: $22.48 billion
- Total assets: $44.18 billion
- Debt ratio: 50.9 percent
Virginia has a debt ratio higher than 50 percent, making it the first state on the list in which liabilities account for more than half of total assets. With a total net position of $21.7 billion, Virginia ranks 14th out of all 50 states.
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- Total liabilities: $24.37 billion
- Total assets: $47.67 billion
- Debt ratio: 51.1 percent
Wisconsin's debt ratio is still lower than the 54.3 percent national median. In 2016 Wisconsin received higher tax revenues across the board, including income, sales and excise taxes, as well as motor fuel taxes.
- Total liabilities: $9.59 billion
- Total assets: $18.44 billion
- Debt ratio: 52 percent
Total revenues from governmental activities increased year-over-year in Kansas, but so did total expenses, and at a higher rate. Education costs form the bulk of expenditures, about $6.1 billion out of a total of $13.73 billion in expenses for 2016.
- Total liabilities: $17.28 billion
- Total assets: $33.02 billion
- Debt ratio: 52.3 percent
Like Kansas, Oregon increased its total revenues from fiscal year 2015 to 2016 (a $1.2 billion increase), while growing expenditures (a $2.9 billion increase) more than offset those gains. The biggest culprit was education costs, which soared by 19.1 percent.
- Total liabilities: $7.70 billion
- Total assets: $13.67 billion
- Debt ratio: 56.3 percent
Nevada falls into the bottom half of the list of states with the highest debt. However, Nevada has stayed in the black, boosting revenues for fiscal year 2016 through a combination of federal funding, as well as modified business, commerce, cigarette and sales taxes.
- Total liabilities: $21.77 billion
- Total assets: $38.43 billion
- Debt ratio: 56.6 percent
Minnesota leads the West North Central Division with a debt ratio of 56.6 percent, but it’s not the worst in the overall Midwest Region. Though it maintained greater revenues to expenses, the latter rose significantly — a $1 billion increase compared to the previous year — mainly due to growth in health and human services expenditures.
- Total liabilities: $22.23 billion
- Total assets: $37.80 billion
- Debt ratio: 58.8 percent
The good news for Colorado’s state debt is that total assets exceeded liabilities, for a total net position of $15.57 billion. However, assets of governmental activities declined from fiscal year 2015 to 2016.
What doesn’t help the balance sheet in Colorado is the explosion in health and rehabilitation expenses. For the fiscal years 2013-2014 and 2014-2015, health and rehab expenditures totaled roughly $721 million and $823 million respectively. Then, for 2015-2016, they surged to $2.9 billion.
More good news for Colorado: It has four of the hottest housing markets in the country.
- Total liabilities: $30.86 billion
- Total assets: $52.33 billion
- Debt ratio: 59.0 percent
Though it’s in the bottom half of the list, Georgia has shown promise when it comes to state debt and its financial situation. Most notably, Georgia’s growing economy fueled a $1.8 billion increase in tax revenue from fiscal year 2015 to 2016.
- Total liabilities: $25.56 billion
- Total assets: $42.71 billion
- Debt ratio: 59.9 percent
Despite enduring the decline of the American auto industry, Michigan has kept its total revenues above total expenses in the last two fiscal years. It should be noted, however, that the chief source of government revenue was not from taxes, but operating grants Michigan received from the federal government.
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20. New Hampshire
- Total liabilities: $4.33 billion
- Total assets: $6.87 billion
- Debt ratio: 63 percent
New Hampshire is the first New England state in this study of states with the most debt, meaning it has the lowest debt ratio in the Census-designated New England Division. However, the state’s 63 percent debt ratio is higher than the U.S. median.
- Total liabilities: $19.17 billion
- Total assets: $30.33 billion
- Debt ratio: 63.2 percent
Indiana’s state debt could worsen if revenue trends continue. Whereas total revenues rose from $31.72 billion in 2015 to $32.39 billion in 2016, total expenses rose more, from $29.84 billion in 2015 to almost $32.5 billion in 2016.
- Total liabilities: $50.63 billion
- Total assets: $79.96 billion
- Debt ratio: 63.3 percent
Ohio has the second-highest total liabilities in the Midwest region, trailing Illinois’ huge amount of state debt. Fortunately, Ohio also possesses the largest total net position — $29.33 billion — in that same region, just ahead of No. 38 Missouri.
17. West Virginia
- Total liabilities: $11.74 billion
- Total assets: $18.53 billion
- Debt ratio: 63.4 percent
West Virginia’s debt ratio is the second-highest in the South Atlantic Division. Its total liabilities though are less than the U.S. median, which are $14.57 billion.
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- Total liabilities: $4.98 billion
- Total assets: $7.03 billion
- Debt ratio: 70.8 percent
Maine has the second-lowest debt ratio in New England, but it still ranks among the highest in the study overall. Because Maine is a relatively small state, its total net position is low, at $2.05 billion.
- Total liabilities: $8.76 billion
- Total assets: $12.06 billion
- Debt ratio: 72.7 percent
Delaware saw its total net position slide from $3.65 billion in 2015 to $3.29 billion in 2016. The main cause of this is the increase in long-term liabilities, namely the growth of pension debt and other post-employment benefits that the state is on the hook to pay.
- Total liabilities: $3.95 billion
- Total assets: $5.19 billion
- Debt ratio: 76.1 percent
At the end of fiscal year 2016, Vermont’s state revenues exceeded expenditures by only $300 million. The state had anticipated larger revenues compared to the previous year, but personal income tax receipts, as well as inheritance and estate taxes, ended up bringing in less money than projected.
- Total liabilities: $71.2 billion
- Total assets: $93.47 billion
- Debt ratio: $76.2 percent
Washington is saddled with the nation’s seventh-highest total liabilities. With total assets of over $93 billion — the fifth highest of all states — however, Washington’s net position is still in the black.
12. New York
- Total liabilities: $127.37 billion
- Total assets: $160.13 billion
- Debt ratio: 79.5 percent
In our debt by state study, New York boasts the third-highest total assets in the U.S., behind Texas and California. On the flipside, New York’s total liabilities rank fourth highest.
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- Total liabilities: $54.76 billion
- Total assets: $68.23 billion
- Debt ratio: 80.3 percent
Pennsylvania state debt got some relief this year when its pension debt rose less than anticipated. According to Penn Live, the main reason for this was the number of government workers declined, as well as their average pay.
- Total liabilities: $25.1 billion
- Total assets: $31.16 billion
- Debt ratio: 80.6 percent
Although Louisiana ranks No. 10 among states with most debt, its net position improved year-over-year, with assets exceeding liabilities by around $6.1 billion.
- Total liabilities: $19.87 billion
- Total assets: $21.24 billion
- Debt ratio: 93.6 percent
Although Hawaii’s total assets just barely exceed its total liabilities, the state’s financial situation is improving. Despite almost $20 billion in liabilities for the fiscal year 2016, Hawaii’s net position improved from the previous year, according to the state financial report.
8. Rhode Island
- Total liabilities: $7.37 billion
- Total assets: $7.078 billion
- Debt ratio: 104.2 percent
Rhode Island is the first state on the list to have a debt ratio higher than 100 percent. Pension liabilities are the main culprit pushing Rhode Island’s liabilities beyond its assets. Cities such as Providence, Woonsocket and Central Falls are significantly contributing to the state debt. According to a recent study by Rhode Island’s general treasurer, these cities have overall debt and pension liabilities that far exceed their total property value, creating an unstable financial situation.
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- Total liabilities: $50.92 billion
- Total assets: $48.50 billion
- Debt ratio: 105 percent
Maryland suffers from the highest state debt ratio in the South Atlantic Division. It’s also one of only eight states to report greater total liabilities than assets for the fiscal year 2016. At 35.3 percent, rising healthcare costs contributed the highest percentage of governmental expenses.
- Total liabilities: $279.75 billion
- Total assets: $249.44 billion
- Debt ratio: 112.2 percent
California state debt is at alarming levels, especially as the state’s economy seems to be plateauing, according to California’s most recent financial report. The biggest source of California’s deficit is unfunded employee-related liabilities, such as pensions, post-employment benefits and compensated absences.
- Total liabilities: $49.63 billion
- Total assets: $35.04 billion
- Debt ratio: 141.6 percent
Kentucky’s total net position — total assets including deferred outflows of resources minus total liabilities including deferred inflows — is almost negative $15 billion. According to calculations from the state's retirement systems board, Kentucky's state pension is $13 billion short of what it needs to pay workers over the next 30 years. Just like Kentucky, there are surprising ways you could be putting yourself into debt.
- Total liabilities: $67.61 billion
- Total assets: $29.75 billion
- Debt ratio: 227.2 percent
Connecticut’s total liabilities surpass assets by almost $38 billion. According to Reuters, the state’s finances have been disrupted by unfunded pension debt, high taxes, emigration out of the state and falling revenues. The state’s debt is jeopardizing major cities like the capital Hartford, which is nearing bankruptcy.
- Total liabilities: $89.2 billion
- Total assets: $36.29 billion
- Debt ratio: 245.8 percent
In Massachusetts, primary government liabilities exceed assets by nearly $53 billion. The biggest sources of state debt are pensions, school construction and transportation-related construction. At the state level, pensions are typically the largest source of debt. For most Americans, their mortgage is their largest source of debt.
- Total liabilities: $188.93 billion
- Total assets: $62.20 billion
- Debt ratio: 303.7 percent
Illinois has a pension problem. According to Moody’s, the state owes more than $250 billion in pension debt. When the Illinois General Assembly failed to pass a budget for fiscal year 2018, Moody’s downgraded Illinois’ credit rating so that it’s just above the "junk" rating level. The state's total net position is actually $6.4 billion worse than New Jersey; New Jersey simply has a higher debt ratio.
1. New Jersey
- Total liabilities: $176.51 billion
- Total assets: $56.20 billion
- Debt ratio: 314.1 percent
Taking the No. 1 spot of states with the most debt is New Jersey. And its state debt is hard to fathom. Including deferred inflows and deferred outflows of resources, New Jersey’s total liabilities surpassed its assets by $120.3 billion. While New Jersey ran up more expenses than revenues in the last two fiscal years, that's not the principal cause of its dire financial straits.The main cause is, not surprisingly, long-term pension liabilities and related post-employment benefits.
As with all other states, in 2015 New Jersey implemented the Governmental Accounting Standards Board recommendation for pension accounting and financial reporting. Besides requiring more detailed and comprehensive measurement of pension costs, this new policy for the first time made governments recognize long-term obligations for pension benefits as liabilities. The changeover in policy sent many states into the red, but New Jersey was hit particularly hard, resulting in the highest state debt in the U.S.
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Methodology: To determine the states with the most and least amount of debt, GOBankingRates calculated the debt ratio of each state, which equals the 1) total liabilities and deferred inflows, divided by 2) total assets and deferred outflows. These two metrics were sourced from each state's most recent Comprehensive Annual Financial Report. For all states except Alabama, this was fiscal year 2016. States were then ranked in order from lowest debt ratio to highest debt ratio.