Ranking All 50 States by Fiscal Soundness

At the end of fiscal year 2024, the combined assets of all 50 state governments totaled roughly $2.2 trillion, while their total liabilities came in at approximately $2.9 trillion - leaving a collective shortfall of $765 billion. The largest single driver of that shortfall is unfunded pension obligations, which account for $832 billion, followed by unfunded retiree healthcare benefits (OPEB) at $514 billion.

Our composite "Fiscal Soundness Score" grades each state from 0 to 10 based on eight weighted categories, drawing from Truth in Accounting's Financial State of the States report, credit ratings from all three major agencies, Reason Foundation's state debt data, U.S. Census population figures, and each state's own comprehensive annual financial report.

Methodology - Eight Weighted Factors

Best and Worst States

Score Distribution Across All 50 States

All 50 States Ranked #1 to #50

Click any column header to sort. Use the search box to find your state, or filter by grade tier.

Per-Taxpayer Surplus vs. Burden

Truth in Accounting calculates how much each state would need from every federal income tax filer to cover all outstanding obligations - or how much surplus exists per taxpayer. The swing from North Dakota's $63,300 surplus to New Jersey's $44,500 burden is staggering - a $107,800 gap per taxpayer.

Total State Debt Per Capita

Connecticut leads the nation in per capita state debt at $26,187 per resident, followed by Massachusetts, New Jersey, and New York. At the other end, Tennessee, Utah, Nebraska, Idaho, and South Dakota each carry less than $3,000 in debt per resident.

Themes in the Data

The Pension Crisis is the #1 Driver of Fiscal Distress

Unfunded pension obligations ($832 billion) and unfunded retiree healthcare ($514 billion) together total $1.35 trillion - making retirement liabilities far and away the dominant driver of state-level fiscal shortfalls. States like Illinois, New Jersey, Connecticut, and Kentucky have pension funding ratios well below 50%, meaning they have set aside less than half the money needed to cover promises already made to public employees. By contrast, states like South Dakota, Tennessee, and Wisconsin have pension systems that are close to fully funded.

AAA Credit Doesn't Always Mean Fiscal Health

Maryland and Delaware both hold AAA credit ratings from the major agencies, yet Truth in Accounting classifies both as "Sinkhole States" with significant hidden liabilities. Delaware is especially striking - it holds AAA ratings but ranks 45th out of 50 on TIA's list with a $15,700 per-taxpayer burden. Maryland sits at 41st with an $11,100 burden. Credit ratings assess a state's ability and willingness to repay bonded debt specifically - they don't fully capture unfunded pension obligations, OPEB liabilities, or other off-balance-sheet commitments. This is why our ranking factors in balance sheet health alongside credit ratings.

Small, Conservative States Dominate the Top

The top 10 states are generally smaller in population, have lower costs of government, and tend to favor conservative fiscal policies - balanced budget requirements, spending limits, and well-funded rainy day reserves. Utah stands out as the best-run state overall, combining triple-A credit ratings with strong population growth, a diversified economy, proactive pension reforms, and a healthy surplus.

Population Decline is a Fiscal Red Flag

States losing population - Illinois, Connecticut, New Jersey, West Virginia, and New York - face a structural fiscal squeeze: a shrinking tax base must support a fixed or growing burden of debt and obligations. Illinois has lost over a quarter-million residents since 2020, yet its pension obligations continue to grow.

Detailed Tier Breakdown

A Tier (9.0+) - Elite Fiscal Health

These three states run the tightest fiscal ships in the country. All maintain surpluses, strong credit ratings, well-funded pensions, healthy reserves, and growing or stable economies. Utah is the gold standard - the only large-ish state that excels across every metric. Tennessee combines strong growth with minimal debt. North Dakota benefits from energy revenues and conservative budgeting, though that energy reliance introduces some volatility risk.

B Tier (7.0-8.9) - Strong Fiscal Health

The B tier contains 19 states that generally manage their finances well but may have one or two weak spots - Alaska has volatile oil revenues and declining population, West Virginia is losing residents, Florida faces climate insurance costs. Idaho and Wyoming just miss the A tier. These states typically have investment-grade credit, surplus balance sheets, and reasonable debt loads.

C Tier (5.5-6.9) - Average to Below Average

The C tier is where cracks start showing. These 11 states often have decent credit ratings but carry growing pension burdens, face revenue volatility, or have stagnating populations. Texas notably sits here despite its AAA credit rating because Truth in Accounting classifies it as a Sinkhole State with a $1,100 per-taxpayer burden and rising long-term obligations. New Hampshire just barely fell into Sinkhole territory with a $700 per-taxpayer burden.

D Tier (4.0-5.4) - Weak Fiscal Health

The D tier's 10 states have significant structural fiscal problems - large unfunded pension liabilities, population decline, high debt loads, and/or chronic budget difficulties. New York's $233 billion total debt and Hawaii's nation-leading debt-to-GDP ratio place them here despite having functional economies. Alabama, South Carolina, and Mississippi all carry per-taxpayer burdens exceeding $8,000.

F Tier (Below 4.0) - Fiscal Crisis

The bottom seven states face genuine fiscal emergencies. Illinois is essentially the poster child for fiscal mismanagement - the lowest credit rating of any state, the worst pension funding, chronic budget impasses, and rapid population loss. New Jersey and Connecticut are equally burdened on a per-taxpayer basis ($44,500 each). California carries the largest total debt of any state at $497 billion, though its massive economy prevents an even lower score. Delaware - despite carrying AAA credit ratings - lands here due to a staggering $15,700 per-taxpayer burden. Louisiana's $13,000 burden rounds out the F tier.

Profiles - Best and Worst States

Average Fiscal Score by Region

The Mountain West and Great Plains states significantly outperform the Northeast and Pacific coast. The Southeast shows a wide spread - states like Tennessee and Georgia rank near the top while Louisiana and Mississippi fall into D territory.

Sunshine States vs. Sinkhole States

Truth in Accounting divides states into two camps: "Sunshine States" that have enough assets to cover all liabilities, and "Sinkhole States" that don't. The split is exactly 25-25 as of FY 2024. Among Sunshine States, the average taxpayer surplus is $10,600 per filer. Among Sinkhole States, the average burden is $12,700 per filer.

Population Trend vs. Fiscal Score

There's a strong correlation between population growth and fiscal health. States gaining residents are expanding their tax bases and diluting per-capita obligations. States losing population face the opposite - a shrinking base supporting growing legacy costs. Of the 15 states with growing populations, the average fiscal score is 7.4. Of the 13 with declining populations, the average is just 4.7.

S&P Credit Rating Distribution

Data Sources