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Report: California state debt twice that of New York’s, more than Greece

A report by the State Budget Solutions Project of the Sunshine Review, a state and local government watchdog group, shows that total state debt in California is more than $617 billion — more than any other state in the union.

California’s state debt is more than twice that of New York’s — at about $300 billion — and has increased from SBP’s 2011 debt report. California had $612 billion in debt last year.

The state of California also has more debt than the financially troubled nation Greece, which has more than $423 billion in public debt, according to the Economist.

SBP’s calculation includes the “state’s regular debt, the fiscal year 2013 budget gap, outstanding unemployment trust fund loans, unfunded other post employment benefit liabilities, and the state’s unfunded pension liabilities.”

Bloomberg reports that California is still Standard & Poor’s lowest-rated U.S. state due to recurring budget gaps, earning it an “A” credit rating.

New York has the second highest debt of all 50 states, followed by Texas, which has nearly $287 billion in state debt.

State debt in the U.S. totalled $4.17 trillion, with more than half that debt coming from market-valued unfunded pension liabilities — $2.8 trillion.

“These market-valued pension liabilities provide a realistic view of the money owed to public pension systems as a result of years of skipped payments, borrowed funds, and inaccurate discount rate assumptions,” according to the study.

“In comparison to market-valued liabilities, traditionally calculated unfunded pension liabilities hide the true enormity of state debt obligations.”

In fact, traditionally calculated figures only put unfunded pension liabilities at $760 billion.

Even though state debt levels remain high, it’s actually lower than last year’s $4.24 trillion figure. State debt decreased due to reductions in “unemployment trust fund loans and fiscal year budget gap totals.”

“Fiscal year budget gaps alone fell by more than half. The lack of a subsequent, sizable drop in total state debt, however, shows that the cause of state debt is a systemic one requiring far more than annual budget balancing to eliminate,” according to the report.

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