One of the nation’s leading financial watchdogs says North Carolina has fared better than most states in terms of balancing its budget, but the picture isn’t all rosy as the state has an average debt burden of $1,400 per taxpayer.
In its annual report, Chicago-based Truth in Accounting ranks North Carolina 14th in the U.S. in fiscal health. It determines taxpayer burden by taking the money each state has to pay its bills and divides that by the estimated number of state taxpayers. Eleven states show surpluses after TIA crunches the numbers. While North Carolina isn’t one of them, its debt is lower than all but two of the remaining 39 states.
“It’s almost a success story, as much as you can find one in state and local governments,” TIA’s director of research Bill Bergman told Carolina Journal in giving the state faint praise.
TIA found that North Carolina shows a debt burden of $4.3 billion, with most of that debt related to pension and retiree healthcare benefits — a common issue in most states. North Carolina has set aside 86 cents for every dollar of promised pension benefits and only 8 cents of every dollar needed for retiree health care benefits, according to TIA.
Still, the Tar Heel State finds itself in much better shape than others, including TIA’s home base of Illinois, which shows an average taxpayer burden of $57,000, according to the research.
Bergman noted that in 2010, during the tail end of the Great Recession, North Carolina showed an average taxpayer burden of about $8,000, but has seen its situation steadily improve over the past decade. This chart shows that while the average taxpayer burden across the U.S. has remained relatively consistent since 2010, North Carolina’s finances have made significant positive strides.
“That’s a sign they do walk the talk on balancing the budget, unlike states like Illinois and New Jersey,” Bergman said. “Even so, North Carolina has run up a debt on the taxpayers’ backs, but compared to other states it’s in great shape.”
TIA’s report says that although all states received federal aid from the CARES Act and other grants related to COVID-19 relief in 2020, the majority of states’ finances worsened in the past fiscal year with a total nationwide debt of $1.5 trillion. The average taxpayer burden across all 50 states was $9,300, about $2,000 worse than in fiscal 2019.
Alaska found itself in the best financial situation, with an average taxpayer surplus of $55,100.
The data used in the study comes from annual comprehensive financial reports and retirement plan reports.