The Institute for Truth in Accounting (IFTA) recently announced completion of a significant, comprehensive study of all 50 states’ assets and liabilities, including pension and retirement healthcare obligations.
The study determined that six states had a per taxpayer burden over $20,000:
- Connecticut ($41,200)
- Illinois ($26,800)
- Hawaii ($25,000)
- Kentucky ($23,800)
- Massachusetts ($20,100) and
- New Jersey ($34,600).
The Taxpayer Burden represents the funds that will be needed to pay the commitments the state has already accumulated divided by the state’s taxpayers.
‘If governors and legislatures had truly balanced each state’s budget, no taxpayer’s financial burden would exist,’ said Sheila Weinberg, Founder and CEO of the Institute. She continued, ‘A state budget is not balanced if past costs, including those for employees’ retirement benefits, are pushed into the future.’
The study found four states (Nebraska, North Dakota, Utah and Wyoming) have assets available to pay their debt and obligations related to pension and retirees’ healthcare.
The study reviewed each state’s Comprehensive Annual Financial Report to offset assets against liabilities. For the first time, a detailed analysis of pension and healthcare liabilities uncovered the states’ actual obligations. From these calculations, the Institute was able to determine the Taxpayer’s Burden. Results for each state are available at http://truthinaccounting.org.
Employee compensation packages include retirement benefits. A portion of these benefits is earned each period and should be included in the current budget as a portion of current employee compensation costs. Instead most states handle many of benefits on a ‘pay-as-you-go’ basis. This obligates future taxpayers to cover these past costs – without receiving any benefits or services.
‘Though 49 of the 50 states have constitutional or legal requirements to balance budgets, most states employ a variety of financial maneuvers to circumvent this requirement,’ said Roger Nelson, chair of IFTA and former vice chair of Ernst & Young. ‘The largest of these maneuvers is related to employee compensation.’
The Institute for Truth in Accounting (IFTA) is dedicated to promoting honest, accurate, and transparent accounting at all levels of government and business. As a non-partisan, non-profit organization, the IFTA works to expose accounting deficiencies while promoting better, more accessible delivery of accurate government financial data-and, in turn, providing a foundation for more informed public policy. The IFTA provides its expertise to develop more effective accounting standards and deliver accurate government financial information to policymakers, opinion leaders, and citizens, so they can all work for a more secure financial future.
Submitted by TIA