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.