State and Local Governments With the Most Debt Per Capita

The COVID-19 pandemic has had enormous impacts on state and local governments by reducing tax revenue, causing widespread unemployment, and increasing healthcare costs. In addition to reducing spending and, in some cases, raising taxes, state governments have relied on debt to address their budget shortfalls during the pandemic.

According to data from the U.S. Census Bureau, total state and local government debt was $3.17 trillion in 2019 or about $9,700 per person. State governments use debt to finance education, infrastructure and to cover budget gaps, among other things. State and local government debt can fluctuate due to spending habits or changes in income from taxes and other sources, such as during recessions.

In the 1940s and 1950s, state and local government debt was much lower than today. Federal, state, and local governments grew substantially during the 20th century. Spending, revenue, and debt increased as the population grew, and the government invested more in infrastructure, education, and social programs. Leading up to the Great Recession that began at the end of 2007, total state and local government debt increased sharply. It has been falling since 2010 but increased between 2019 and 2020. In the wake of the pandemic, the coming years will likely see a continuation of this trend. States with rising debt may raise taxes or cut spending to help bring their budgets under control.

The amount of state and local government debt depends heavily on the population of the state, the amount of state employee retirement benefits, the size of social programs, and tax revenue. As a result, states vary widely in their amounts of debt on both a total and per capita basis. While New York leads the country in terms of per capita government debt, at $18,411 per person, California, the most populous state, has the largest amount of total debt, at $507 billion. Conversely, Wyoming has both the lowest amount of total and per capita debt, at about $2 billion or $3,437 per person.

The states with the most state and local government debt per capita are spread across the country, including both very populous states such as California and Texas as well as sparsely populated Alaska. With over $18,000 in state and local government debt per resident, New York ranks first in per capita debt. Local debt in New York is over $50 billion more than state government debt, due in large part to high amounts of school district debt.

Nationally, state and local government debt totals $3.17 trillion, with local government debt making up 63 percent of the total. The state and local debt to state GDP ratio shows how much a state owes compared to how much it produces. States with less debt as a percentage of state GDP are in a better position to repay their debts. As a percentage of state GDP, state and local government debt ranges from a low of 4.9 percent in Wyoming to a high of 24.7 percent in Kentucky.

To find the states with the most state and local government debt, researchers at Commodity.com analyzed the latest data from the U.S. Census Bureau’s 2019 Annual Survey of State and Local Government Finances and the Bureau of Economic Analysis’s Gross Domestic Product by State for 2019. The researchers ranked states according to the total amount of state and local government debt per capita. Researchers also calculated total state and local government debt, total state government debt, total local government debt, and total state and local government debt as a percentage of state GDP. Total state and local government debt is calculated as the sum of total long-term debt outstanding and short-term debt at the end of the fiscal year (debt payable one year or less from its date of issue).

State	Rank	Total SLG debt per capita	Total SLG debt	Total state gov debt	Total local gov debt	Total SLG debt % of GDP
N.Y.	1	$18,411	$358,150,378,000	$150,744,533,000	$207,405,857,000	20.2%
Conn.	2	$15,037	$53,612,594,000	$41,822,350,000	$11,790,243,000	18.6%
Mass.	3	$14,263	$98,310,530,000	$78,663,118,000	$19,647,413,000	16.5%
Ill.	4	$13,029	$165,097,105,000	$65,272,156,000	$99,824,941,000	18.6%
Alaska	5	$12,994	$9,505,582,000	$6,060,930,000	$3,444,652,000	17.5%
Calif.	6	$12,823	$506,660,567,000	$145,292,660,000	$361,367,923,000	16.2%
N.D.	7	$12,725	$9,697,010,000	$3,375,270,000	$6,321,740,000	17.0%
Hawaii	8	$12,512	$17,715,106,000	$10,001,827,000	$7,713,279,000	18.5%
Wash.	9	$12,416	$94,548,994,000	$35,584,686,000	$58,964,310,000	15.4%
Kentucky	10	$11,885	$53,097,229,000	$15,346,875,000	$37,750,353,000	24.7%
R.I.	11	$11,283	$11,952,946,000	$9,275,273,000	$2,677,673,000	19.3%
Colo.	12	$11,105	$63,953,107,000	$19,241,118,000	$44,711,988,000	16.3%
Texas	13	$10,410	$301,840,025,000	$53,794,342,000	$248,045,679,000	16.4%
N.J.	14	$10,384	$92,231,421,000	$63,926,685,000	$28,304,736,000	14.5%
Penn.	15	$9,778	$125,178,460,000	$48,958,884,000	$76,219,576,000	15.5%
U.S.	-	$9,659	$3,170,325,344,000	$1,174,375,272,000	$1,995,950,070,000	15.0%

This report was first published by Commodity.com. Read the original article here.