Mississippi is one of 39 states that can’t pay its bills, according to a recently released report and taxpayers owe $10,400 apiece to make the debt whole.
The non-partisan group Truth in Accounting released the 11th edition of its annual Financial State of the States report last month and Mississippi ranked 33rd out of the 50 states with a grade of D (which is given to any state government with a taxpayer burden between $5,000 and $20,000).
Last year, that average taxpayer burden was $10,000.
Truth in Accounting divides states into two categories: Sunshine states that have enough to pay their debts and sinkhole states that do not. Mississippi is unfortunately one of the sinkhole states.
The report says the state has a debt burden of $7.7 billion and things could get worse, as the group said its rough estimate indicates the state could lose $3 billion in revenue due to the COVID-19 pandemic.
The group uses data from fiscal 2019 comprehensive annual financial reports. According to their analysis, 39 states don’t have enough money to pay all of their bills and the states collectively owe $1.4 trillion, with most of that in the form of unfunded pension liabilities ($855 billion).
TIA also estimates the states could lose $397 million in revenue as a result of the coronavirus pandemic.
Sheila Weinberg is the CEO and founder of Truth in Accounting. She says the financial consequences of the COVID-19 pandemic has created a situation where governments can’t kick the can down the road when it comes to their debts.
“Now, it’s apparent that they didn’t have the financial resources to weather any storm, much less the crisis that we’re in,” Weinberg said.
She’s also critical of states that have balanced budget laws, like Mississippi, that allow them to remove big debts, such as pension liabilities, out of the calculation for the annual budget to balance.
“I think these claims of a ‘rainy day fund’ or we balanced the budget give people a false sense of security, that everything must be fine,” Weinberg said. “They might have to borrow some money, we’ve got the ‘rainy day fund’ and we’re really not in much of a crisis.”
She says that by not being up front with voters with the true financial state of affairs, policymakers are undermining the institution of representative government nationwide.
Mississippi’s $14 billion in debt (against $6.3 billion in assets to pay off those bills) includes:
- More than $6 billion in bond debt and nearly $4.2 billion in other liabilities.
- More than $6 billion in unfunded pension benefits and $359 million in unfunded retiree health benefits.
- Debt related to capital assets, which adds up to more than $2.62 billion.
Mississippi’s performance in the report is on par with Alabama. The Yellowhammer State has a taxpayer burden of $7,600 with $10.3 billion in debts (32nd with a grade of D).
Louisiana is worse off than either, with $21.6 billion in debts and a taxpayer burden of $17,100 for a grade of D. The report ranks the Pelican State 40th.
Arkansas is in better shape, with only $1.4 billion in debts and a taxpayer burden of $1,700, giving it a C grade. Arkansas was ranked 17th.
Best regionally is Tennessee, which earned an A grade with a taxpayer surplus of $3,400.
The top five sunshine states in order are Alaska, North Dakota, Wyoming, Utah and Tennessee while the worst sinkhole states ranked from worst are New Jersey, Illinois (where TIA is based), Connecticut, Hawaii and Massachusetts.