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 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.
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 and the Bureau of Economic Analysis. 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.
The analysis found that in California, total state and local government debt amounts to $12,823 per person, compared to $9,659 per person at the national level. Out of all states, California has the 6th most state and local government debt per capita. Here is a summary of the data for California:
- Total state & local government debt per capita: $12,823
- Total state & local government debt: $506,660,567,000
- Total state government debt: $145,292,660,000
- Total local government debt: $361,367,923,000
- Total state & local government debt as a percentage of GDP: 16.2%
For reference, here are the statistics for the entire United States:
- Total state & local government debt per capita: $9,659
- Total state & local government debt: $3,170,325,344,000
- Total state government debt: $1,174,375,272,000
- Total local government debt: $1,995,950,070,000
- Total state & local government debt as a percentage of GDP: 15.0%
For more information, a detailed methodology, and complete results, you can find the original report on Commodity.com’s website: https://commodity.com/blog/us-local-debt/
Mike LaFirenza writes for Lattice News Wire