While Michigan’s finances improved in 2023, it ranked 35th out of 50 states for its “taxpayer burden” in a recent analysis by Truth in Accounting, a nonprofit focused on highlighting government finances.
Truth in Accounting’s fifteenth annual Financial State of the States grades states using an A-F grading scale, while providing perspective on finances through each state’s “taxpayer burden,” which is essentially the amount per taxpayer to pay off all of a state’s debt.
The Chicago-based nonprofit found that while Michigan’s finances improved by $12.5 billion, due to reported revenues exceeding expenses and reduced liabilities for pension and retiree healthcare tied to changes in actuarial assumptions used to estimate future benefit payments.
With $46.8 billion in available assets to pay bills, and more than $75 billion in bills, “the outcome was a $28.2 billion shortfall, which breaks down to a burden of $7,600 per taxpayer,” according to the report.
The bulk of those bills involve more than $39 billion in unfunded pension liabilities.
“Bottom line: Michigan would need $7,600 from each of its taxpayers to pay all of its outstanding bills and received a ‘D’ grade for its finances,” the report reads. “According to Truth in Accounting’s grading scale, any government with a Taxpayer Burden between $5,000 and $20,000 is given a ‘D’ grade.”
Michigan is among 27 states that did not have enough money to cover bills in 2023, and Truth in Accounting founder Sheila Weinberg suggested the path to improvement largely revolves around better funding retirement systems.
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“Most states’ financial conditions improved in fiscal year 2023,” Weinberg said in a statement. “But the states should focus on bolstering their retirement systems so they can weather market downturns and other economic uncertainties in the future.”
Michigan Democrats who took control of the legislature in 2022 for the first time in 40 years are doing something else.
The record $82.5 billion 2025 budget signed by Gov. Gretchen Whitmer this summer reduced pension system contributions by $670 million, while spending that and more on pork projects for lawmakers.
“Over the past few years, lawmakers had been catching up on what they need to prefund retirees’ medical insurance costs,” according to a Mackinac Center for Public Policy analysis. “This year they decided to take the money that they had been spending to prefund those benefits and spend it on other priorities. That $670 million could have taken a bite out of what is owed.”
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In addition, Democrats reduced contributions from current school employees and transferred that burden to taxpayers.
“This transfers the cash freed up by underfunding the pension system to school districts and school workers,” the analysis read. “It was a request from the teachers union whose members will get some extra cash over the short term and, apparently, ignore the longer-term costs.”
Democrats also included at least 415 earmarks that spent $702 million on grants to specific districts, with much of it flowing to Democratic strongholds downstate.
The MCPP analysis shows the district projects funding in state budgets have skyrocketed since 2022, with more than $1 billion in the 2022-23 fiscal year, and more than $1.8 billion in 2023-24.
Nationwide, total unfunded pension liabilities among all 50 states totaled $840 billion, while other unfunded post-employment benefits totaled $493 billion, according to Truth in Accounting.
The Financial State of States report shows North Dakota in the best financial shape with a per taxpayer financial surplus of $55,600, followed by Alaska with a $55,100 per taxpayer surplus, Wyoming with a $23,500 surplus, Utah with a $12,100 surplus, Tennessee with a $9,600 surplus, Oregon with a $8,500 surplus, Iowa with a $8,400 surplus, Nebraska with a $7,500 surplus, South Dakota with a $7,300 surplus, and Idaho with a $6,800 surplus.
The state in the worst financial shape was Connecticut with a $44,300 per taxpayer burden, ahead of New Jersey with a $42,500 burden, Illinois with a $37,000 burden, Massachusetts with a $25,400 burden, California with a $17,400 burden, Hawaii with a $16,500 burden, Delaware with a $15,400 burden, Louisiana with a $13,400 burden, Kentucky with a $13,200 burden, Vermont with a $10,900 burden, and Pennsylvania with a $10,000 burden.