Because no universal guidelines exist for how much debt state governments can afford, when policymakers try to assess how much borrowing to take on for projects such as roads, bridges, and schools, they often compare debt levels in their state to those of others. To make these comparisons, many policymakers evaluate how their state stacks up against geographic neighbors or other states with a common credit rating.

But selecting a peer group based only on these traits overlooks many factors that influence borrowing levels. States with growing populations, for example, may wish to borrow more to ensure that their infrastructure adequately serves residents’ needs. Similarly, having a debt limit or other constraining budget policy can influence the share of borrowing taken on by state governments or localities.

This interactive tool allows users to compare debt levels across more tailored peer groups, including comparing states with similar borrowing practices, constraints, and needs. The tool includes key measures that may influence borrowing levels, such as debt limit policies; the degree to which borrowing is conducted by the state itself, compared to component units such as independent agencies and authorities; and the division of borrowing between the state and local governments. The tool also includes traits that states more commonly consider when choosing peers, such as credit ratings and geographic proximity.

In the “State Comparison” section, users can compare these data, including debt levels, for any two states, or any state to the U.S. median. In the section labeled “50-State Data,” users can sort and group all 50 states using multiple criteria, allowing users to identify groupings using a mix of measures. Information about the measures and the underlying data may be found in the “About the Data” section at the bottom of this page.

States can use these data to select more appropriate peer groups, giving them a deeper understanding of how similarly positioned states manage their borrowing.

The measures were selected based on evidence in the debt affordability and management literature that they relate to state debt levels, the feasibility of collecting the data, and a desire to avoid redundancy.¹ Pew also limited the number of measures to make the tool easy to use and understand.

This tool is not intended to be an exhaustive catalog of the factors that might affect state borrowing levels. Instead, the tool is intended to help states consider relevant criteria when constructing peer groups.

Each measure is described below.

General obligation debt limit type (2018)

General obligation (GO) debt is backed by a state’s full faith and credit, the strongest possible pledge. As a result, GO debt is typically a state’s highest rated and lowest cost form of debt.²

All but two states have legal GO debt limits, which vary in restrictiveness and structure. For example, Connecticut limits this debt to 1.6 times its total estimated general fund tax receipts, while Arizona effectively prohibits its issuance.³

Pew has classified each state’s limit for GO debt as one of the following types:

• Constitutional amendment. Three states—Alabama, Ohio, and West Virginia—require an amendment to their constitutions to issue GO debt.
• Metric. In 11 states—Connecticut, Georgia, Hawaii, Mississippi, Nevada, New Hampshire, North Dakota, Oregon, Tennessee, Utah, and Wisconsin—debt or annual debt service is not allowed to exceed a certain metric-based threshold. Tennessee, for example, caps debt service at 10 percent of combined revenues in its general, debt service, and highway funds.
• Metric-based with referendum to exceed. North Carolina, Pennsylvania, and Wyoming use a metric to cap debt but allow issuance above the cap with voter approval.
• No limit. Maryland and Vermont place no restrictions on GO debt.
• Prohibition. Arizona, Colorado, Indiana, and Nebraska effectively prohibit GO debt. Indiana law forbids any GO debt to be issued; the others authorize amounts so low—$350,000 or less—as to be equivalent to prohibitions.
• Referendum and/or supermajority. Thirteen states—Alaska, Arkansas, California, Idaho, Iowa, Kansas, Kentucky, Maine, Michigan, Minnesota, Missouri, Montana, and Rhode Island—require some combination of voter approval and/or a legislative supermajority (generally, three-fifths or two-thirds) to issue debt.
• Referendum and/or supermajority and metric. Fourteen states—Delaware, Florida, Illinois, Louisiana, Massachusetts, New Jersey, New Mexico, New York, Oklahoma, South Carolina, South Dakota, Texas, Virginia, and Washington—require a referendum and/or supermajority and have a metric-based cap on debt or debt service.

Centralization (fiscal year 2014)

In some states, component units of government, such as independent agencies and authorities, conduct much of the borrowing, rather than the primary state government. Centralization measures primary government debt as a share of the total debt issued by the primary government and its component units. Across the states, centralization ranges from 0 percent—meaning that all borrowing is by entities other than the primary government—to 100 percent, meaning the primary government does all of the borrowing.

Component unit debt generally relies less on state general funds for repayment than primary government debt does. Often, lenders have no legal claim on state general funds if a component unit defaults. As a result, state comparisons based only on total debt may be misleading. Montana and Delaware, for example, have about the same total debt, but most of Montana’s debt is held by component units and most of Delaware’s is held by the state. When comparing measures of “total debt,” choosing peers based on the degree of centralization of debt may provide more appropriate comparisons.

Note: To calculate centralization in a state, Pew calculated primary government debt from states’ 2014 comprehensive annual financial reports. It then calculated debt held by major component units, as reported in their annual financial statements. Adding the two sums created a measure of “total debt,” from which the percentage held by the primary government—centralization—was determined.⁴

The local-state borrowing division (2015)

In some states, local governments are responsible for paying for most capital projects within their jurisdictions. In others, the state government is responsible for those projects, increasing its overall borrowing. The division of borrowing responsibility is related to the debt limit: In general, local governments in states with highly restrictive state debt limits have higher debt levels.⁵ This measure compares local government borrowing to the combined debt held by the state and local governments. Higher numbers indicate a greater share of total debt is held by local governments. The local-state borrowing division ranges from 17.9 percent to 88 percent.

Revenue volatility (1998-2017)

Revenue volatility is the annual fluctuation in tax collections and is affected by several factors, including a state’s mix of tax streams. The score reflects the standard deviation of yearly percentage change in total tax revenue between 1998 and 2017.⁶ Pew controlled for the effects of tax policy changes using the National Conference of State Legislatures’ State Tax Actions Report.

A low volatility score means that revenue levels were similar from year to year, and a high score indicates that revenue grew or declined more dramatically. The scores range from 2.7 to 37.6. States with more volatile revenue face shared budget challenges. When revenues drop, fixed costs—such as debt service—may crowd out operating spending.⁷

Population growth (2008-17)

Research has found that population growth in a state is associated with an increase in borrowing. ⁸ From 2008 to 2017, state populations shrank or grew within a range of -1.3 percent to 16.5 percent.

Debt levels (2015)

States compare their debt levels to peers through a variety of measures, including total outstanding debt and metrics that normalize debt levels by population or wealth to create a level scale across states of various sizes. Pew’s tool includes two ratios: debt per capita and debt as a percentage of state personal income. States often use a ratio of debt service to revenue when they evaluate debt levels and set limits. This ratio is not included in this tool due to cross-state comparability challenges.⁹

Debt per capita

Debt per capita, which measures total debt against a state’s population, facilitates comparisons between states of different sizes. It also helps policymakers understand the debt burden on individual residents, who provide much of the revenue states use to repay debt in the form of taxes and user fees. The range of debt per capita is $870 to $11,059.

Debt as a percentage of state personal income

Considering a state’s debt level relative to its available resources for repayment is a common practice used by states, credit rating agencies, and academics.¹¹ State personal income is one measure of a state’s ability to service debt. Debt as a percentage of personal income ranges from 1.9 percent to 17.6 percent.

Credit ratings (September 2018 and September 2015)

This tool allows users to group states by S&P Global Ratings’ credit ratings to compare those with similar credit profiles. The user can select credit ratings from 2018 or 2015 to look at either recent information or information corresponding to other data points in this tool.

Census region and division

This tool allows users to group states by U.S. Census region and subregion (“division”) to make geographical comparisons. There are four regions and nine divisions. Although geography alone is not always a useful benchmark, state officials often wish to understand more about their neighbors’ conditions.