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If you think the state’s debt burden is bad, a new report suggests that at least in one way it’s the worst in the nation.
The report, released in September by the state Office of Legislative Research (OLR), found that Connecticut’s net tax-supported debt (NTSD) as a percentage of its own-source revenue was 103.8% for fiscal year 2022. That was 8 percentage points higher than in Hawaii, the next highest state, and more than four times the median of 24.5% for all states.
Only two other Northeast states ranked in the top 10, with Massachusetts at 90.2%, New Jersey at 76.6% and Rhode Island at 55%. Nebraska ranked the lowest, at just 1%.
NTSD is a metric that captures general obligation bond debt and other types of debt supported by statewide taxes and fees, but does not include revenue bonds. According to OLR, the metric assumes that a state’s capacity to pay its debt depends on the state’s total population, suggesting that states with relatively high debt per capita have less capacity to repay debt than those with relatively low debt per capita.
Own-source revenue includes the total taxes, charges and fees raised at the state and local levels, but excluding utility, liquor store and insurance trust fund revenue.
According to the OLR report, Connecticut’s fiscal year 2022 NTSD totaled $28.97 billion, or $7,988 per capita. By comparison, the national median NTSD was $5.29 billion, or $1,178 per capita. The median means half of the states were higher and half lower.
The report noted that Connecticut’s rank among other states remained relatively unchanged
from 2012 to 2022.
“Across all states, the median NTSD as a percent of state GDP decreased from 2.47% in 2012 to 2.18% in 2017 and 2% in 2022,” it states, "Over the same period, Connecticut’s increased from 8.09% in 2012 to 9.11% in 2017 and then decreased to 9% in 2022.”
OLR noted that to produce its report it relied on reports issued by Moody’s Investors Service, which “provide the rating agency’s analysis of debt burdens across all 50 states.”
It also states that the Moody’s report notes that both Connecticut’s and Hawaii’s debt burdens are relatively higher than other states “in part because they take on liabilities at the state level that in many states are the responsibility of other levels of government (e.g., school construction costs in Connecticut and public education, hospitals, and jails in Hawaii).”
OLR produced a similar report in 2015 that found Connecticut’s NTSD per capita in 2014 also ranked first among the states. That report placed the state’s NTSD per capita in 2014 at $5,491.
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