(The Center Square) – States across the Northeast carry five-figure debts for each taxpayer, according to a new report from the Reason Foundation.
Government debts in Connecticut and New Jersey equate to $26,187 and $22,968 per resident, respectively, the two highest in the country, and roughly triple the national average of $8,000. The analysis reflects liabilities held as of 2023, the most recent year for which data are available.
Massachusetts came in at sixth ($17,082), while New York ($11,547) and Vermont ($10,930) landed 11th and 12th. Rhode Island ($8,093) at 18 ticked in just above the national average, followed by Maine ($6,576) and Pennsylvania ($5,872) ranked 21 and 24, respectively. New Hampshire ($4,374) was No. 30.
“For taxpayers, this is really troubling because they already pay high taxes in most of these states,” Mariana Trujillo, the foundation’s managing director of government finance, told The Center Square. “Taxpayers reasonably expect their high taxes to be enough to balance budgets and fully fund services. But state and local governments are still spending more than they take in. In many cases, governments will want to raise taxes even higher when they should reduce spending, cut services, find efficiencies, and start paying down this debt.”
And while some states faired better than others on a per capita basis, Northeastern states again led the pack for long-term debt: New Jersey, New York, Massachusetts, Connecticut, and Pennsylvania landed in the top 10. The category is particularly ominous given the taxpayer impact of state debt that carries over from year to year.
When states operate with budget deficits, lawmakers scramble to fill the gap with revenues and program cuts. The former often requires tax increases.
“The current debt at all levels of government is unsustainable. State and local governments need to balance their annual budgets by reducing unnecessary and wasteful spending,” Trujillo said. “States can’t further tax their way out of these structural imbalances. They should implement public pension reforms that pay down debt as quickly as possible and prevent the accrual of future unfunded liabilities.”
It’s a battle that has stalled budget negotiations in Pennsylvania to a complete halt as the narrowly split legislature gridlocks over how much the state actually has to spend. Now 115 days overdue, Democrats and Republicans are about $3 billion apart, leaving counties, schools, and health care services footing the bills alone.
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“If policy and political leaders don’t act, state and local debt service and legacy costs will keep crowding out core services,” Trujillo said.
The Reason Foundation is a non-profit libertarian research group that focuses on free markets and individual freedom.
