Weightiest State Debt Burden


The State Budget Solutions website came out with a very useful chart on state debt yesterday.  However they painted California as the poster-state for profligacy.  They’re not but some other state clearly is.

Add a column for population and debt per person and you get this chart.  Sort it and you get this chart with one state, with a debt burden of $32,013 per person.  easily on top.  Alaska ($30,404) and Hawaii ($28,533), off in their own worlds, are even lower.  Only Connecticut ($27,540) of the contiguous US states is within 36% of their debt per person.  California is about half at $16,230 per person.

Yet yesterday the governor of this debt-addicted state gave the keynote address at his political party’s convention:

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This is how ‘we did it.’

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35 responses to this post.

  1. Posted by Tough Love on August 29, 2012 at 1:12 pm

    True, but with California hosting 25% of the nation’s welfare recipients, if the ratios were to Taxpayers (not population), CA might again be on top.

    Reply

  2. Posted by Tough Love on August 29, 2012 at 1:17 pm

    John, just too a look at your chart. So, with debt like that, when are you going to join me in calling for a hard freeze on the DB Plans for CURRENT workers ?

    While it won’t address that debt, certainly, priority to addressing the debt (which must also be done with benefit reductions, not just contribution increases), we should at leat stop digging the hole deeper via ADDITIONAL unaffordable accruals.

    Reply

    • I’m there and working though the NJTA to get this out:

      https://burypensions.wordpress.com/2012/08/17/pledge-for-fairer-pension-system-in-new-jersey/

      Though first more people have to realize that NJ is really the biggest problem out there. Having our governor take bows for some mythical comeback doesn’t help.

      Reply

      • Posted by Tough Love on August 29, 2012 at 1:48 pm

        To get NJ’s taxpayers to realize the grossly excessive current level of promised pensions, the focus should be on presenting total Plan costs as the level annual % of pay (calculated under say 3%, 5%, 7%, and 9% interest rates for discounting liabilities) necessary for fully funding the promised pension over the working career of the employee.

        Taxpayers understand that, and when comparing (after deducting any actual employee contribution) what in my estimate would be a level annual 25% for teachers & miscellaneous workers and 40% for police (and 1/3 higher if COLA increases are reinstated), to what THEY get from their employers (rarely more than a 3% 401K match plus the employer’s SS contribution) hopefully THEY will rally the legislators for the significant change needed ….. a hard freeze to all of NJ’s Plans.

        Reply

  3. Posted by Anonymous on August 29, 2012 at 2:06 pm

    I live in Florida now and gas prices are 3.85 to 4.15 per gallon for regular. At least New Jersey has some of the least expensive prices for gasoline which a daily expense. Hey what to you know something positive about New Jersey! We also have tax on clothes in florida, no tax on clothes in NJ

    Reply

  4. Hi John. Great one! Where can we find the official ARCs going back 5 or 10 years to compare to actual contributions?

    Reply

    • Unfortunately for us Frank, the best place to look is the New Jersey legislature.

      In 2002 they passed a law ‘phasing in’ the ARC over 5 years. That is, the first year they redefined putting in 20% of the ARC as being OK. In 2010 they again
      redefined it but this time at 1/7th with another phase-in. And this is an ARC that is already understated based on actuarial wiles.

      Reply

      • Thanks John, but where do we find the official (bogus) ARC they based the 20% and 1/7th on? They had to have a fake number to cheat on, right? By the way, I just ran NJ on my extrapolation sheet from Census data and got a real UAAL as of FY 2012 of $168 billion.

        Reply

  5. Posted by Anonymous on August 29, 2012 at 3:52 pm

    The Federal Government has been getting blood from a turnip for many years!

    Reply

  6. Posted by Anonymous on August 29, 2012 at 4:01 pm

    Yeah Christie did a wonderful job of allowing the ostriches to stick their head further down in the sand. At least when the Democrats were in they admitted that the state was in terrible shape and they did nothing about it. Christie has people believing everything is okay now. I guess he wants to get elected president some day

    Reply

  7. Posted by Eric on August 29, 2012 at 4:02 pm

    That will end very soon. Remember, Bernanke can only print until, as Jim Rogers said, he runs out of trees. It’s looking mighty sparse right now.
    Eric

    Reply

  8. Posted by TREEeditor2 on August 29, 2012 at 4:37 pm

    this weeks barrons 8/27/12 had a front page article on the states and their debt burden and how they ranked.-page 23. How the muni band market is in bigger trouble than they let on with thier rankings. had all states ranked. #7 from the botton was NJ. Top south dakota.

    Reply

  9. Posted by Eric on August 29, 2012 at 4:59 pm

    Yes TREEeditor2 and Warren Buffet has dumped his backing of Munis. This is a man who has always trashed gold, which handily beat the returns of Berkshire Hathaway, in the last 10 years if priced in gold.
    Eric

    Reply

    • Posted by TREEeditor2 on August 30, 2012 at 2:16 pm

      eric, dont remember buffet trashing gold but do remember him haveing a big stake in silver, so there is a conflict in our views

      Reply

  10. Posted by speedkillsu on August 30, 2012 at 10:33 am

    If CA can admit it why can’t we .In a long-overdue moment, governor Jerry Brown has finally admitted the obvious, the state’s pension system is broke and California Has “Lived Beyond Our Means”. Unions of course are howling at that obvious admission.
    Read more at http://globaleconomicanalysis.blogspot.com/2012/08/governor-brown-admits-obvious-we-have.html#UG2xFQvOR0ys6aay.99

    Reply

  11. Posted by Eric on August 30, 2012 at 6:01 pm

    TREEeditor2:
    Not only does Warren Buffet continually trash gold, but also, his lieutenant, aka Vice Chairman of Berkshire, Charlie Munger, said only a jerk would hold gold. He made these remarks in September of 2010.
    Eric

    Reply

  12. Posted by MJ on August 30, 2012 at 6:35 pm

    What does it matter who is on first? The first state to fall is all that matters, The rest of the states will follow suit like dominoes in a wind storm. Even if half of what we read is true, it is still only a matter of how and when and which state will have the dubious honor of being first!

    Reply

  13. Posted by Eric on August 30, 2012 at 7:21 pm

    MJ
    How are the states interconnected? They are not “joined at the hip” as are the European banks and the US banks. The US banks provide the credit default swaps for the European banks which will be reneged upon by the US banks if the printing of fiat currency is insufficient to continuously prop them up to postpone their collapse.
    Almost every large bank is insolvent. Not every state is insolvent. Some states have a balanced budget and a sound pension system.
    The fear of some, is a federal bailout of states which have not been prudent in their finances, since the money for the bailout, if not printed, would be drawn from the solvent states.
    Eric

    Reply

    • Posted by Tough Love on August 30, 2012 at 8:04 pm

      Heaven help us if these outrageous Pensions promised Public Servants are honored with a Federal bailout after their promising Gov’ts go belly up.

      Greed MUST have a consequence or we’ll never be a lesson learned.

      Reply

    • Posted by Not a golfer on August 31, 2012 at 9:16 am

      One way it could play out is the feds allow state and local ‘municipal’ bonds to fail, which could be considered a tax on the upper middle class and the rich, The federal government and the federal reserve would then fill the funding gap caused by investors fleeing the municipal bond market until it ‘stabilized’. This seems to be the preferred way to handle it in California. The teeny tiny bankruptcy of Central Falls RI ended up with debtors completely protected.

      Reply

    • I didn’t mean to imply that the states were interconnected. I was referring to any state that is in critical financial meltdown such as CA, NJ, IL depending on who you believe in how bad it really is or isn’t. Once one debt ridden state falls, the rest will follow suit. Only a matter of what it will look like and when it gets to that point of insolvency.

      Reply

  14. Posted by Eric on August 30, 2012 at 8:13 pm

    Tough Love:
    I doubt that there would be a federal bailout, but it is a possibility. I was speaking to someone today who asked about what about everyone relying upon these pensions. I told that person that I do not rely upon Santa coming down my chimney with a bag of goodies.
    Sometimes, one must make contingency plans. He may not find my house.
    Eric

    Reply

  15. Posted by Eric on August 31, 2012 at 5:57 pm

    Tough Love:
    I was recently in the Netherlands. The Dutch are grateful to their old enemy Germany for stupidly keeping the Euroland experiment afloat by foolishly sending boatloads of money southward from German toil done to keep the banksters and Mrs. Merkel in power. When will those people wake up?
    The Dutch are all in favor of the bailout of Greece, since, as I have said, their pensions have foolishly and greedily followed the greatest rate of return with the greatest risk of non repayment. They joke about their pensions being based in Greek assets which have been gobbled up by the banksters.
    Cutting of pensions in the Netherlands is news to me. It is much easier to cut by a percentage there as opposed to in the US, since many people make roughly the same amount of money for government service.
    In the US, the difference in payment for government work is staggering.
    Eric

    Reply

    • Posted by Tough Love on August 31, 2012 at 7:18 pm

      I’d be fine with a % cut …. but way higher than the Dutch 15% is necessary …. at least 50% (more for safety).

      Reply

  16. Posted by Eric on August 31, 2012 at 11:10 pm

    Agreed! Safety 75%.
    Eric

    Reply

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