Connecticut’s net tax-supported debt as a percentage of its own revenue greatly exceeded all other states for fiscal year 2022 according to a recent report from the Office of Legislative Research (OLR).
The report found that Connecticut’s net tax-supported debt (NTSD) as a percentage of its revenue was 103.8 percent. Its per capita share of that debt was $7,988. Both of those figures earn it a first-place ranking over other states. In total, Connecticut’s NTSD for 2022 was $28,967,901,ooo.
Hawaii, which ranked second for NTSD as a percent of its revenue, had an NTSD of $9,904,366,ooo. Its NTSD as a percentage of its revenue was 95.8 percent. Massachusetts had the second-highest NTSD per capita rating, at $7,988 per person.
The media NTSD per capita across all states was $1,178. The median NTSD as a percentage of states’ own revenue was 34.5 percent.
Of New England states, Rhode Island also ranked in the top ten for NTSD per capita, at $3,103 per person.
According to Moody’s Investor Services, the original source of the data OLR analyzed, both Connecticut and Hawaii have higher debt burdens than other states because they “take on liabilities at the state level that in many states are the responsibility of other levels of government.”
Connecticut also ranked high in NTSD as a percentage of personal income and state GDP, coming in second for both measurements. Its NTSD as a percentage of personal income was 9.4 percent and 9 percent as a percentage of state GDP. Hawaii outranked Connecticut in both measurements, which had an 11.2 percent rate for NTSD as a share of personal income and 10.1 percent of NTSD as a share of the state GDP.
The median NTSD as a percentage of personal income was 2.2 percent and the median NTSD as a percentage of state GDP was 2 percent across all states.
OLR notes that Moody’s does not track long-term changes to the NTSD metrics and appears to have only calculated NTSD as a percentage of a state’s revenue since 2022. However, OLR conducted its own analysis using Moody’s historical calculations for NTSD as a percentage of state GDP and found Connecticut’s rank among other states has not changed much between 2012 and 2022.
Across all states, OLR’s analysis found NTSD as a percentage of state GDP decreased from 2.47 percent in 2012 to 2 percent in 2022. In 2012, the NTSD as a percentage of Connecticut’s state GDP was 8.09 percent. It increased to 9.11 percent in 2017 before decreasing to 9 percent in 2022.
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One of the key selling points former Governor Lowell P. Weicker professed was that a state income tax would put Connecticut on a sound fiscal foundation. I remember well the firestorm of debate which occurred. I even went to the anti-tax rally at the Capitol orchestrated by Tom Scott. He predicted that the adoption of a state income tax would become a “License to Spend”. Mr Scott was 100% correct. Connecticut now has the 5th largest debt in the country. It is only superseded by California, Kentucky, New Jersey, with Illinois topping the list. Yes we even are more in debt than the state of New York.