(The Center Square) – Georgia’s overall fiscal health worsened during the onset of the COVID-19 pandemic, a new report shows.
Despite revenue growth fueled by federal aid, financial watchdog Truth in Accounting (TIA) said the state has not adequately funded its pension and health care plan, which places a debt burden of more than $10 billion on future taxpayers.
Based on the state’s fiscal year 2020 audited financial report, the state had $30.9 billion available to pay $40.9 billion worth of bills, resulting in its shortfall at the onset of the pandemic, TIA’s annual Financial State of the States report showed. As a result, each taxpayer has a debt burden of $3,500.
Georgia ranked 23rd out of 50 states for fiscal health and budget management, and it earned a C grade in the TIA analysis. Any government with a taxpayer burden between $0 and $4,900 received a C grade. A dozen other states received a C grade.
Georgia’s financial problems mostly resulted from unfunded retirement obligations that have piled up over the years, TIA said. TIA found Georgia did not fund $8.6 billion in pension liabilities and $6.2 billion in retiree health care benefits promised to state employees.
‘Georgia’s overall financial condition worsened by $1.3 billion during the onset of the pandemic mostly because pension plan liabilities grew faster than the plan’s assets,” TIA said.
Georgia was one of the first states to reopen businesses that were shuttered to help stop the spread of COVID-19. The state ended the last fiscal year with a $3.7 billion surplus, a recent report by the State Accounting Office showed.
The state’s net tax collections were nearly $27 billion for fiscal 2021, a 13% year-over-year increase. Net tax revenue in Georgia was $2.5 billion in June, representing a $563 million increase – or 29.1% – compared with June 2020, Gov. Brian Kemp’s office said.
Georgia’s rainy day fund grew from $2.7 billion on July 1, 2020, to nearly $4.3 billion by June 30, 2021, because of the surplus. State law requires 15% of the state’s general revenue funds be placed in the reserve account. Lawmakers must decide how to spend the additional revenue.
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).
By Nyamekye Daniel | The Center Square
