A new report by Truth in Accounting reveals vast new piles of debt for American taxpayers – in addition to the estimated $14.5 trillion in the national debt.

While the new debt doesn't reach that stratospheric level, the total, in the range of $1 trillion, is not pocket change, and the reporting organization calls it a "very real crisis."

The debt is mostly what states have agreed to provide in payment for future employee pensions and health care but have yet to secure with a funding mechanism.

Sign up to participate in sending the message to members of Congress that they should refuse to raise the national debt ceiling further and enable more deficit spending in Washington. The "No More Red Ink" campaign encourages Congress to shut down all new plans for bailouts, "stimulus" spending and even the funding for Obamacare.

The state with the biggest developing headache, according to the report, is Connecticut, which has an estimated $53.3 billion shortfall, or a burden for each individual taxpayer of $41,200.

New Jersey was next, with a far higher liability – at $106.6 billion, but more taxpayers. Individually, citizens would need to pay $34,600 to cover the costs.

 

At a time when Congress is under pressure from the Democratic Party and the White House to raise the national debt ceiling yet again, the additional liability for taxpayers prompted a warning from spokeswoman Nancy Mathieson.

"The money is not being put aside to fund this in most cases. … There is no lockbox," she said.

The indebtedness is on top of the per-taxpayer national debt tab of $130,000 resulting from Washington's actions.

The report from Truth in Accounting said only four states actually have planned ahead far enough to have a strategy for those liabilities.

"If governors and legislatures had truly balanced each state's budget, no taxpayer's financial burden would exist," said Sheila Weinberg, founder and CEO of the institute. "A state budget is not balanced if past costs, including those for employees' retirement benefits, are pushed into the future."

The study noted six states have a per taxpayer burden of more than $20,000, including Connecticut's $41,200, Illinois' $26,800, Hawaii's $25,000, Kentucky's $23,800, Massachusetts' $20,100 and New Jersey's $34,600.

The four states with their costs under control?

"Nebraska, North Dakota, Utah and Wyoming have assets available to pay their debt and obligations related to pension and retirees' health care," the report said.

The study reviewed each state's Comprehensive Annual Financial Report to offset assets against liabilities. For the first time, a detailed analysis of pension and health care liabilities uncovered the states' actual obligations. From these calculations, the institute was able to determine the taxpayer's burden.

The figures largely had been unknown, as in past years states were not required to report unfunded liabilities as companies in private industry were, the report said.

The report said employee compensation packages include retirement benefits. A portion of the benefits is earned each period and should be included in the current budget as a portion of current employee compensation costs. Instead, most states handle many of the benefits on a "pay-as-you-go" basis. This obligates future taxpayers to cover these past costs – without receiving any benefits or services.

"Though 49 of the 50 states have constitutional or legal requirements to balance budgets, most states employ a variety of financial maneuvers to circumvent this requirement," said Roger Nelson, chair of IFTA and former vice chair of Ernst & Young. "The largest of these maneuvers is related to employee compensation."

Mathieson said the solution for states is to copy private business, which for years has been ordered to deal with what is known as the "required annual contribution" to cover future pension and health care costs.

Both taxpayers, who may have to pay higher assessments in the future, and state employees, expecting pension payments for which there could be no money, should be concerned, she said.

The institute's work includes promoting honest, accurate and transparent accounting at all levels of government and business.

Non-partisan and nonprofit, it works to reveal accounting deficiencies and support a more informed public policy.

The National Conference of State Legislatures has compiled a detailed report on the state procedures for balancing budgets.

"The NCSL has traditionally reported that 49 states must balance their budgets, with Vermont being the exception. Other authorities add Wyoming and North Dakota as exceptions, and some authorities in Alaska contend that it does not have an explicit requirement for a balanced budget," the organization said.

But it noted that an open loophole is for capital expenditures, where many states borrow.

"The common state practice is to consider that borrowing for capital expenditure does not violate the principle of maintaining a balanced budget. Borrowing for capital expenditure does not legally violate state balanced budget provisions, either because those provisions specify a way that general obligation debt may be issued, or because, in states that do not permit general obligation debt, judicial decisions have validated the issuance of other forms of debt. In some states, general obligation debt requires a vote of the people."

It is in Colorado where such a voter-approval provision was adopted in the constitution. But as WND has reported, state officials who wanted to finance bridge repairs there and were concerned voters wouldn't approve the debt simply created a state-owned "enterprise" and had that entity borrow the money.

Then they imposed "fees" on all owners of vehicles in the state to repay the debt.

Analysts have concluded the maneuver was nothing more than a tax-and-spend scheme hidden behind the language of a business.

"The proceeds are used to fund work previously performed by [the state highway department] and funded through General Fund appropriations. The only rationale for creating the Bridge Enterprise entity and funding it through a tax masquerading as a fee was to deliberately circumvent [the state's constitutional ban on borrowing without voter approval] and deny the citizens of Colorado their constitutional right to choose whether improved bridge infrastructure justifies $100 million in additional annual taxation," said analyst Tom Ryan.

 

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