Maryland has some hefty bills to pay in the near future, and not enough money to pay them.
According to an analysis of the state’s 2013 Comprehensive Annual Financial Report and actuarial reports, in The Financial State of States by Truth in Accounting, Maryland has $45.3 billion in bills due, yet only has $15.9 billion available to pay them, earning the designation “Sinkhole State.”
Citing “budget shenanigans” that include borrowing money to fill budget holes and delaying payments for current bills, Truth in Accounting seeks to bring transparency to the true state of the states’ financial picture.
“The biggest trick of all is to not include millions, if not billions of dollars, of current compensation costs in the budget,” the report concludes.
Bills due include bond debt, unfunded pension and retiree health benefit liabilities.The report’s authors discovered that 77 percent or $30 billion in liabilities are not reported on Maryland’s balance sheet.
The analysis noted:
Maryland statutes require the legislature to pas a balanced budget. One of the reasons Maryland is in this precarious financial position is state officials use antiquated budgeting and accounting rules to report Maryland’s financial condition. Since employee retirement benefits are not immediately payable in cash, the related compensation costs have ben ignored when calculating balanced budgets
The per-taxpayer burden of Maryland’s deficit $14,200, good for a ranking 14th out of the 25 Sinkhole States identified by Truth in Accounting
Maryland’s debt service payments on bonds will increase rapidly over the next five years.Bond payments will rise from $387 million in 2016 to $557 million by 2019.Legislative analysts warned that revenue from the state property tax—that goes to pay bond debt—won’t keep pace with the rapidly increasing debt payments.
Over the last seven years, state debt has increased by $5 billion, 1.4 billion of which has been used to cover general fund deficits.
Despite the state officials boasting about Maryland retaining a AAA bond rating, the ratings agencies specifically cite Maryland’s budgetary pressure, mounting bond debt and unfunded pension liabilities as concerns.