The Center Square
Tennessee continued its trend of growing a financial surplus as the state ranked sixth nationally for its fiscal health, according to Truth in Accounting’s annual Financial State of the States report.
Using numbers that included data from the fiscal year that ended in June 2020, Tennessee had $8.7 billion more than it owed in obligations, amounting to a $4,400 surplus per taxpayer and earning a grade of B in the report, which was released Tuesday.
The state had a $3,400 surplus per taxpayer the year before.
Tennessee’s leaders “have been pretty fiscally responsibility. They have been meeting their balanced budget requirements,” Truth in Accounting CEO and founder Sheila Weinberg said. “We are a little bit nervous because they do have $1.4 billion of pension liability and another $1.6 billion of retiree health liability.”
Not reflected in this report, Tennessee legislators did allocate $250 million for the state’s pension fund in this year’s budget.
The state has 92 cents set aside for each promised dollar of pension benefits, but only 12 cents saved per dollar of promised retiree health care debt, Weinberg said.
Eleven states had a financial surplus at the end of the fiscal year, the report showed.
Tennessee’s revenues for the fiscal year increased because of federal grants received early in the COVID-19 pandemic.
“It’s not free money,” Weinberg said. “It’s free money with strings.”
In the fiscal year before, Tennessee had received $12 billion in federal operating grants. In the last fiscal year included in this report, those grants increased to $17 billion, a 42% increase, Weinberg said.
At the end of the fiscal year 2020, 39 states did not have enough money to pay all of their bills. The total debt of the 50 states amounted to $1.5 trillion.
The average taxpayer burden across the 50 states was $9,300 for fiscal year 2020, $2,000 worse than the previous year.
The top three indebted states were Connecticut (per-taxpayer burden of $62,500), New Jersey ($58,300) and Illinois ($57,000).
The most fiscally healthy states were Alaska (per-taxpayer surplus of $55,100), North Dakota ($39,200) and Wyoming ($19,500).