Fair to middlin’ – Oklahoma debt high, but look at Alaska, New Jersey, Hawaii, Connecticut, New Mexico and Illinois
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Published: 17-Nov-2011


In a nationwide analysis of total state debt across the United States, Oklahoma falls into the upper-middle ranking -- meaning most states are worse off than Oklahoma. And, some are much worse off. 

For the nation as a whole, total state debt averaged $13,754 for every American, and $38,721 for each private sector worker, according to State Budget Solutions, a nonprofit organization based in Alexandria, Virginia.

America’s five worst states for debt per capita are Alaska, New Jersey, Connecticut, Hawaii and Illinois, the group concluded. 

In comments sent to CapitolBeatOK today (Thursday, November 17), Bob Williams, president of State Budget Solutions, said his group “looked at more than just the aggregate number. When state debt is broken down by various measures of size, population, number of private sector workers and output, it reveals the actual financial burden on each person. Everyone deserves to know how much their share of the state debt is and what their government is doing to remedy this growing crisis.”

According to a press release from the group, “Several states make multiple appearances at the bottom of the three categories in this study, meaning they rank worst. These states include: Alaska, New Jersey, Hawaii, Connecticut, New Mexico, and Illinois. 

“Alaska ranks worst in two categories: total state debt per capita at $39,373 per person and total state debt per private sector worker at $102,389 per worker. Hawaii’s debt is 71.39 percent of its total private output, putting it last in the total debt as a percentage of GSP for private industries category.”

For purposes of comparison with Alaska and Hawaii -- identified as among the worst states in terms of indebtedness in the SBS analysis -- Oklahoma ranks 15th best in per capita debt ($9,850 per person), and 19th in debt burden per private sector worker, at $30,030. At 30.79 percent, Oklahoma ranks right in the middle (26th) in government debt as a percentage of total private output. 

To continue the “apples and apples” analysis, looking at a state in a positive position in the SBS analysis pointed to the Cornhusker State. The SBS report said Nebraska ranked best in three categories: “$4,274 per person in total debt per capita, $9,787 per worker in total debt per private sector worker, and only 10.05 percent of its debt is its total state output. The bottom five states in the total debt as a percentage of GSP for private industries category were the only states to break the 50 percent margin.”

Turning to other areas in the analysis, State Budget Solutions put the Sooner State’s total state debt at $36,952,387,000, placing the nation’s 23rd most populated state 20th best in state debt ranking.

As a point of comparison, the worst in the total state debt category (50th in the ranking) was California, with debt projected at $612,054,955,000. 

New Jersey and Illinois are “the only states that rank near the bottom for both absolute state debt and the lists in this report,” SBS said.

As a point of comparison, the worst in the total state debt category (50th in the ranking) was California, with debt projected at $612,054,955,000. Texas ranks high in total debt, but was not among the worst states in this assessment looking at multiple factors. 

In the words of today’s press release, “California, New York, and Texas, have the largest populations, number of private sector workers, and private sector outputs, but none break the bottom rankings in any category in this report.”

 

States with the best rankings in multiple categories, in addition to Nebraska, were Tennessee, Indiana and South Dakota. 

In terms of methodology, State Budget Solutions provided in its full report the following explanation of its assumptions and bases for analysis:

“Total state debt as calculated by SBS includes outstanding debt as well as future liabilities, including pension and other post-employment benefits liabilities, Unemployment Trust Fund loans, and current projected budget gaps. Total state debt is broken down per person to show the burden of debt on each person in a state.

“Moreover, total debt is divided by the number of private sector workers in each state. This value takes the labor force into account and gauges the amount of debt each non-public sector worker carries. Each private worker carries the weight of paying back the state's outstanding debt obligations and all liabilities, including pension and health benefits promised to public sector workers. Undoubtedly, this leads to financial strains on private workers from heavier taxes and private employers who have to manage higher associated costs to run their businesses.

“Economic activity in each state is also considered in this report. Total debt is taken as a percentage of each state's gross state product for private industries. The larger a state's portion of debt is to its private sector output signifies more resources necessary to pay off public debt in the future than to add to future economic growth.”

State Budget Solutions calculated total state government debt in the U.S. as $4,238,306,708,000. The U.S. population benchmark used for the estimate was that found in the 2010 Census, i.e. 308,143,800. 

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