If Louisiana was suddenly forced to payoff all of its debts, it would cost every state taxpayer $15,500. That’s among the reasons the state got a D grade and is ranked No. 36 in the U.S. in a recent analysis conducted by Truth in Accounting, an organization that provides annual assessments of state financial information.
State elected officials have made repeated financial decisions that have left Louisiana with a debt burden of $19.7 billion, the study found, as the state only has $15.9 billion in assets to pay $35.6 billion worth of bills. Given the state’s balanced budget mandate, TIA argues Louisiana should be debt-free.
The root of the financial problems is mostly unfunded retirement obligations that have accumulated over many years. Of the $34.2 billion in retirement benefits promised, the state hasn’t funded $9.6 billion in pension and $7.4 billion in retiree health care benefits.
Government officials have failed to disclose $2.6 billion of unfunded retirement debt on the state’s balance sheet, the financial report reads, with auditors finding some financial data was not presented in accordance with generally accepted accounting principles.
Gov. John Bel Edwards’ office disputes that claim, saying the Governmental Generally Approved Accounting Principles the state uses does not require it to report the $2.6 billion in unfunded debt.
In a prepared statement, the governor’s office says there are “many misconceptions in the report” and that the Louisiana taxpayer burden is actually the lowest it has been in a decade.
“The state agrees with the $15.9 billion of assets, but to say Louisiana has $35.6 billion worth of bills due today is very misleading,” the statement reads. “The $35.6 billion worth of bills includes what is due today and what is due in future years. In accordance with actuarial calculations and statutory requirements, not all of these bills are due today.”
Edwards’ office goes on to say the reported $19.7 billion shortfall is inaccurate based on the fact that the state does not have to pay future liabilities today.
“Even if we assume the $19.7 billion is accurate, all members retire today, and all bonds are due today, the liability per taxpayer burden would be drastically reduced using the number of individual taxpayer returns presented in the statistical section of the audited CAFR. The CAFR is listed as a source of information in this report, but it does not appear this is where the taxpayer number is being pulled.”
Regardless, overall, Louisiana is ranked behind neighbors Texas and Mississippi on the list, and is one of 40 states without enough money to pay its bills. It’s also one of more than 15 states receiving a D grade because its taxpayer burden is between $5,000 and $20,000.