Many people struggled with their financial circumstances and fiscal health in 2020. Based on a new report, it seems that state governments experienced similar trouble. Every year, Truth in Accounting, a nonprofit committed to transparent government financing, releases its Financial State of the States report. The report examines the intricacies of government finances and ranks the fiscal health of the 50 states. In this fiscal year 2020 report, COVID-19 and federal assistance play a major part in government financing, but it’s noted that “despite receiving federal assistance from the CARES Act and other COVID-19 related grants, the majority of states’ finances worsened.”
Missouri is in that majority.
Missouri’s debt burden was $8.2 billion in fiscal year 2020. That’s $4,400 per taxpayer needed to fully pay the state’s bills, up from $4,300 the year before. Much of this debt burden comes from unfunded retirement obligations, for which “the state had only set aside 60 cents for every dollar of promised pension benefits and 6 cents for every dollar of promised retiree health care benefits.” This debt burden earned Missouri a “C” grade and a ranking of 24 out of the 50 states for fiscal health.
This report provides further evidence that Missouri was not in a financial position to successfully weather the economic downturn that followed the COVID-19 pandemic, something my colleague Elias Tsapelas and I have written about. Re-evaluating our tax structure and tackling pension problems (by shifting employees to defined contribution accounts, for example) would likely improve Missouri’s grade and ranking in this report. Fixing the state’s fiscal health is a big task, but it’s something that lawmakers should start to prioritize.
