Colorado’s finances rank 27th in the nation, and the state earns a ‘D’ for its financial condition, according to Truth in Accounting’s 2019 State of the States report.
The bottom line: Colorado’s bills exceed its assets by $14.5 billion, and the state would need $7,200 from each taxpayer to pay them off, according to the report, which was released Sept. 24.
Although the state ranked in the ‘D’ grade category, the report states that Colorado’s overall financial condition improved by 25 percent from last year’s report. The state also received a D grade in 2018, when it ranked 31st among the states and racked up what the report terms a taxpayer burden of $9,800.
According to the report, Colorado has $13.6 billion available to pay $28.1 billion worth of bills.
“Colorado’s elected officials have made repeated financial decisions that have left the state with a debt burden of $14.5 billion,” the report states. “Colorado’s financial problems stem mostly from unfunded retirement obligations that have accumulated over the years. Of the $35.7 billion in retirement benefits promised, the state has not funded $19.4 billion in pension and $1.3 billion in retiree health care benefits.”
Data included in the report was derived from the state of Colorado’s 2018 audited Comprehensive Annual Financial Report and retirement plan reports.
The report analyzes and grades all 50 state governments based on their true financial condition. TIA has been grading states’ finances for the past 10 years.
Colorado is among 18 states that currently have taxpayer burdens between $5,000 and $20,000 per taxpayer and were given a ‘D’ grade. Taxpayer burden is calculated by dividing the state’s bills by the number of taxpayers.
The 18 ‘D’ grade states and taxpayer burdens are:
New Hampshire: $5,000
West Virginia: $8,300
New Mexico: $13,300
Rhode Island: $13,900
South Carolina: $14,500
There are several ways for states to accumulate sizable taxpayer burdens and earn ‘D’ grades according to the Financial State of the States methodology.
Many state governments struggle to close budget gaps resulting from benefit programs that have been promised to public employees but not fully paid for. These unfunded retirement and health care obligations represent real expenses that fall on taxpayers.
“Budget makers are approaching the point of no return when their state requires thousands or tens of thousands of dollars from each taxpayer in order to pay off all their bills,” said Sheila Weinberg, Founder and CEO of TIA, in a news release. “These debts have a tangible effect on residents, ranging from a diminished quality of life, to lower real estate values, and increased out-migration.”
Across the country, some 40 state governments found themselves in varying degrees of debt. The situation in the worst-off states is dire:
• New Jersey’s obligations work out to a taxpayer burden of $65,100.
• Connecticut’s taxpayer burden is $51,800.
• Massachusetts’ taxpayer burden is $31,200.
Again this year, Alaska’s finances ranked best in the nation. According to the report, Alaska has resources exceeding debt that amounts to a positive $74,200 per taxpayer.
Rounding out the top five states are:
• North Dakota, $30,700 excess per taxpayer
• Wyoming, $20,800 excess per taxpayer
• Utah, $5,300 excess per taxpayer
• Idaho, $2,900 excess per taxpayer
The average taxpayer burden across all 50 states is $8,450. In total, the states have racked up $1.5 trillion in unfunded debt.
Truth In Accounting is a government watchdog organization based in Chicago that promotes timely, truthful and transparent financial information.
See a summary of all 50 states’ taxpayer burdens and access a copy of the full report here.