Debt Lessons from the States: Investing in Public Employees while Protecting Taxpayers

Thanks to balanced budget requirements and debt limits, state governments have less opportunity for debt overexposure than the federal government. However, pension obligations are a growing concern often overlooked by these customary ratios that measure a state’s long-term fiscal health.

Texas 2036 has reviewed public pension standards and stability across the country to see how our state stacks up. The good news is Texas has done a good job at managing its debt. The state has the fourth lowest debt per capita among the most populous states. Texas is one of 10 states with the highest possible credit rating and a low overall level of debt per capita.

But when the bond rating service, Fitch Ratings, added pension liabilities to tax-supported debt, Texas fell to 28th in the nation in total obligations compared to the state’s total personal income. Obviously, our pension obligations are a more serious issue than traditional forms of debt.

Read More