While Hawaii has $19.5 billion worth of assets, only $3.9 billion are available to pay $15.4 billion of bills as they come due. Each taxpayer’s financial burden is $25,000.
“State officials say their budgets are balanced but do not include employee pension and healthcare obligations in their calculations,” stated Sheila Weinberg, Founder and CEO of the Institute. “Unlike the federal government, states can’t ‘print money’ to cover costs and shore up their financial conditions.”
The Institute’s newly released “Financial State of the States” Report reviewed each state’s Comprehensive Annual Financial Report (CAFR) to offset assets against liabilities. For the first time, a detailed analysis of pension and healthcare liabilities was completed which uncovered the states’ actual obligations. From these calculations, the Institute was able to determine the true Taxpayer’s Burden for all fifty states. Click here to download the full Report.
Based upon extensive research, the Institute for Truth in Accounting has found most states are sinking in debt. Despite the existence of a balanced budget requirement, in all but one state, governors and legislatures have dug these financial holes. The lack of truth and transparency in state budget processes has concealed the accumulation of $1 trillion of outstanding bills. The Institute has identified Connecticut, New Jersey, Illinois, Hawaii and Kentucky as the top five “Sinkhole” states, each with a per taxpayer burden more than $23,000. Conversely Wyoming, North Dakota, Nebraska, Utah and South Dakota are considered “Sunshine States’, because a per taxpayer’s surplus or minimal per taxpayer’s burden exists in these states.
In response to this report, Kalbert Young, director of the state Department of Budget and Finance, said “the State is aware of its metrics and statistics of its liabilities relative to other states. The Administration has been advocating for pro-actively dealing with the structural financial problems that challenge the future viability of State systems – like, the unfunded liabilities of its pension system and health insurance trust fund. These are issues that have been only minimally addressed for decades so the challenge and degree to address them is going to be severe, but they can not and should not be ignored. We are developing a pro-active financial plan to address these issues that would put Hawaii back on a trajectory comparable to other states.”
Sen. Sam Slom, R-Hawaii Kai to Kahala, said “This is yet another in a continuing series of national organizations critical of Hawaii’s fiscal policies. No matter how many times our majority party elected officials deny it, Hawaii has become a “sinkhole” state with plenty of sewage. Our $21 billion two-year budget, passed in May, 2011, is not balanced as required by our Constitution. Our state Employees Retirement System is underfunded by a true $15-$18 billion, our state employees health plan, EUTF, is underfunded by an estimated $8 billion, our infrastructure is badly broken, and our emergency reserve special funds have all been raided along with new taxes passed this year. Moody’s already downgraded Hawaii’s credit. We have not taken steps to prepare for an improved business and investment climate because of the economic denial of our leaders even though Hawaii has many opportunities to emerge from the fiscal sinkhole.”
House Republican Caucus Leader Gene Ward, said: “We applaud the Institute for Truth in Accounting for pointing out what Republicans have been saying for years. That is why we have issued an alternative budget each year, available online at www.hawaiistatebudgetonline.com. The Democrat-controlled Legislature has made the sinkhole deeper by enacting budgets that spend every tax dollar we collect. ”
The majority Democrats in both the House and Senate have not yet responded to inquiries about this report.
Hawaii Reporter is seeking comment on this report from several government officials and will add their comments as they are returned.