Recently the Institute for Truth in Accounting (ITA) released an updated Financial State of the States report. Unfortunately, Kentucky has ranked near the bottom with regards to state debt and taxpayer burden. I can’t be the only person growing weary of low rankings for the Commonwealth.
The ITA points out that a lack of transparency and truth in government accounting have left taxpayers blind to just how much debt their states have been accumulating.
The report analyzes all 50 states and ranks them with Kentucky coming in at #46 (with 50 being the state in the most precarious situation.) Kentucky’s overview points out several reasons for the ranking being so low:
Kentucky statutes require the legislature to pass a balanced budget. One of the reasons Kentucky is in this precarious financial position is state officials use antiquated budgeting and accounting rules to report Kentucky’s financial condition. Since employee retirement benefits are not immediately payable in cash, the related compensation costs have been ignored when calculating balanced budgets. Additional problematic accounting methods include recording loan proceeds as revenues and delaying the payment of bills.
Almost $27.3 billion of state employees’ retirement and other costs have been pushed into the future. Each taxpayer’s share of the financial burden is $23,500.
Notice that a significant portion of that debt is related to public pension liability, something The Bluegrass Institute has covered in depth in our Future Shock series. This is certainly one of the greatest threats to Kentucky’s financial situations.
When will Kentucky’s leaders stop ignoring state debt issues and embrace policies that will catapult us to to the top of the list rather than keeping us hanging around the bottom?