Connecticut has the second-highest taxpayer burden in the nation, according to a report released this week by a think tank.
The state’s tax burden — the amount each individual taxpayer would have to pay the state’s treasury for the state to be debt-free — is $49,000, according to Truth in Accounting (TIA), a Chicago-based nonprofit organization that analyzes government financial reporting.
TIA recently released its annual “Financial State of the States” report, which ranks states based on their financial health according to Fiscal Year 2015 data. Connecticut’s burden inched up slightly from $48,600 in last year’s report.
Connecticut was one of the states dubbed a “sinkhole state” by the group, meaning it was among the five states with the highest taxpayer burden.
Only New Jersey had a greater taxpayer burden than Connecticut, at $59,400. The other states rounding out the top five were Illinois at $45,500, Kentucky at $33,700, and Massachusetts at $30,300.
A high taxpayer burden could negatively impact people who live in Connecticut, said TIA Founder and CEO Sheila Weinberg.
“Even though these taxpayer burdens may seem intangible, they have serious consequences,” she said in a statement. “If these amounts don’t decrease, taxpayers will suffer, whether it’s through higher interest rates, tax increases, or fewer government programs.”
TIA officials say their method of determining a state’s debt is more comprehensive than that use by state government officials. TIA examines data including promised but unfunded benefits, such as retiree health care and pensions, while state governments exclude some pension liabilities and “the vast majority of retiree health care benefits from their balance sheets,” according to the group.
A new accounting rule now requires state governments to report all pension debt, which TIA says is “a step in the right direction,” but the rule has spurred a large increase in the debt being reported nationwide.
“It’s great to see state government officials reporting more accurate figures and increasing transparency,” Weinberg said. “But elected officials are still not using the correct numbers and continue to hide retiree health care and some pension debt. This needs to change.”
According to TIA, Connecticut “is still hiding $1.8 billion of pension debt and $14.7 billion of retirement debt.” With those amounts included, the state needs $62.4 billion to pay its bills, the group claims.
“We are consistently working to improve the stability of the budget and put Connecticut on the best path moving forward,” Office of Policy and Management spokesman Chris McClure said. “We all know that there is more hard work to be done and over the coming months we will do what is necessary to keep the state moving in the right direction.”
He added: “The state Comptroller and the Auditors of Public Accounts meet GAAP (generally accepted accounting principles) standards in preparing and auditing financial reports of the state. Moreover, OPM and the governor’s office have reported and continue to report extensively on our long-term obligations, as well as our significant efforts to bring them under control.”