Half of American states do not have enough funds to pay their bills, according to a new analysis released Thursday.

The nonprofit Truth in Accounting, which advocates for more transparency in public finance, released its Financial State of the States report. It concluded that 25 states were unable to cover all their financial obligations at the end of fiscal year 2024, which for most states ended June 30.

While most states mandate balanced budgets, the report says elected officials often use workarounds by excluding exclude certain costs such as future pension obligations and deferred maintenance from their budget calculations.

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“This practice essentially shifts these financial responsibilities onto future taxpayers, leaving them to cover the expenses that should have been accounted for in the current budget,” the report states.

In total, Truth in Accounting calculated states hold $2.2 trillion in assets and $2.9 trillion in debts. At $832 billion, unfunded pension obligations are the largest driver of state debts, according to the report.

Truth in Accounting sorts states based on their ability to cover their debts. The top “sinkhole states” — states lacking the funds to cover their costs — were New Jersey, Connecticut, Illinois, Massachusetts, and California.

Conversely, 25 states touted a surplus of funds relative to their total costs and debts. The top surplus states were North Dakota, Alaska, Wyoming, Utah and Tennessee.

Rather than funding promises of pension payouts and retiree healthcare, some elected officials in those states have used those funds to keep taxes low and pay for politically popular programs, the report said. That can make a state budget appear balanced, though its debt continues to increase — the equivalent of charging “a credit card without having the money to pay off the debt.”

The report grades the finances of each state, including a look at its total assets, unfunded liabilities and debts. It also calculates the overall costs to each resident: Kentucky, for example, would need $11,500 from each of its taxpayers to pay all of its outstanding bills, according to the report.

Truth in Accounting lobbies for greater transparency in government and has suggested legislation on the matter. The organization says governments should publish budgets that show the full scope of their debts and future obligations.

“A representative form of government depends on an informed electorate; however, due to current practices in accounting and budgeting, a state’s true financial health is usually obscured, and citizens are deceived or, at best, misled,” the report said. “Without access to truthful, timely, and transparent information, how can citizens be knowledgeable participants in their governments?”