If all taxpayers in Nevada were forced to pay their share of the state’s debt, each would have to contribute $3,300, according to a new report from government fiscal watchdog Truth in Accounting.
In its annual analysis of the fiscal health of each state, TIA gave Nevada a C grade, noting its state government is one of the better-funded ones in the nation.
The report provides an overview of the fiscal health of the nation, providing detailed reports of each state through its “state data lab.”
All 50 states combined, accumulated about $1.5 trillion in unfunded retiree pension and health care benefits, a significant increase since 2009, TIA states. This increased debt continued, TIA adds, despite improved economic and financial market conditions.
According to TIA’s analysis, every state except for Vermont has balanced budget requirements. Despite these requirements, states accumulated that debt.
“How can states rack up debt and balance their budgets at the same time?” the report asks. It answers, “It all depends on how you count."
States balance budgets using differing methods, TIA says. Government officials can inflate revenue assumptions, include borrowed money as income, understate the true government costs, and delay payment of current bills until the start of the next fiscal year to avoid having to include them in relevant calculations.
The most common accounting method used, TIA adds, is when officials hide a large portion of employee compensation from the state’s balance sheet and budget.
Compensation includes health care, life insurance, and pension benefits. As employees earn them, state governments are obligated to pay them. Because some of these benefits may not be paid until after retirement, states often exclude them from the balance sheet, TIA says.
But these numbers still represent current compensation costs, TIA argues, because they were earned and incurred throughout the employees’ tenure, and the money was added to a pension fund in order to accumulate interest or other investment earnings.
Nevada ranked 16 out of 50 states. The top ten states with the healthiest finances are: Alaska, North Dakota, Wyoming, Utah, South Dakota, Idaho, Tennessee, Nebraska, Oregon, Iowa. The bottom 10 states are: Vermont, New York, California, Delaware, Hawaii, Massachusetts, Kentucky, Illinois, Connecticut and New Jersey.
TIA’s Director of Research, Bill Bergman, told Watchdog.org that Nevada’s finances “appear to have been benefiting from better interstate migration trends in recent years, particularly compared to a large, financially-challenged neighbor (California).”
Nevada has $5.4 billion available in assets to pay $8.5 billion worth of bills, resulting in a $3.1 billion shortfall equivalent to the $3,300 taxpayer burden.
Despite reporting all of its pension debt, the state continues to hide $1.5 billion of its retiree health care debt, TIA says. Nevada’s reported net position is inflated by $286 million largely because the state defers recognizing losses incurred when the net pension liability increases, the report states.
Debt, especially the unfunded liability in the Public Employees Retirement System, is the sleeping but soon-to-awaken giant in state and local government, the Nevada Public Research Institute (NPRI) maintains.
Robert Fellner, NPRI’s director of transparency research, said, “Despite receiving nearly $2 billion in taxpayer funding annually, the Public Employees’ Retirement System of Nevada (PERS) has spent years – and hundreds of thousands of taxpayer dollars – arguing that the public does not have a right to access records documenting how these taxpayer-funded benefits are calculated or distributed.”
NPRI sued the state over PERS’ denial of NPRI’s request for records documenting how taxpayer-funded benefits are calculated and distributed. It presented oral arguments before the Nevada Supreme Court in March.
Nevada’s taxpayer burden is less than $5,000, which accounts for its C grade. TIA notes that the Silver State is better off than many other states, but still owes more than it owns.