In its research into the debt woes of states, Truth in Accounting (TIA) has uncovered an interesting nugget: the older a state, the more likely it has financial problems.
Bill Bergman, TIA’s director of research and a former market analyst for the Federal Reserve Bank of Chicago, found that states such as his home of Illinois, as well as Louisiana, Maryland, Massachusetts, New Jersey and Pennsylvania, have some of the most gerrymandered districts as well as a high number of lawyers per capita, Governing reported.
Another trait those six states have in common: they were all admitted into the United States between 1787 and 1818 and they all rank in the bottom third of TIA’s annual Financial State of the States report, which measures total debt and taxpayer burden.
New Jersey ranked worst in the nation with an average debt burden of $61,400 per taxpayer.
The high number of attorneys has led correlatively to the rise of special interest groups in those states, Bergman found, which leads to politicians being swayed toward those interests rather than what is best for taxpayers.
“You see more often the tendencies to borrow for these special interest groups as opposed to raising taxes,” he told Governing, “They’re kicking the can down the road and thus putting the burden on taxpayers.”
The top six states on TIA’s list are all in the West and among the youngest states in the Union – Alaska, North Dakota, Wyoming, Utah, South Dakota and Idaho. The surplus in oil-rich Alaska is $56,500 per taxpayer.
In addition to tapping their natural resources to the benefit of state residents – think natural gas in North Dakota, for example – Bergman said these states don’t have the political machinery you’d find in entrenched states in the northeast.