Four western states and one southern state are the five financially healthiest “Sunshine States” in the American union and have more than enough budgetary resources to cover all of their debts and still have a “taxpayer surplus” left over, according to a Chicago-based non-profit devoted to advocating greater transparency in government accounting.

North Dakota tops the 2025 edition of Truth-in-Accounting’s (TIA) annual Financial Condition of the States survey, followed by Alaska, Wyoming, Utah, and Tennessee. Officials in these five states — all of which vote heavily Republican in national elections — manage their budgets so effectively that they could return significant amounts of money to resident taxpayers.

North Dakota’s “Taxpayer Surplus” is $63,000 per taxpayer, followed by Alaska ($48,500), Wyoming ($27,200), Utah ($14,400), and Tennessee ($10,900). The Taxpayer Surplus represents how much authorities would have left to give back to each state taxpayer after settling all of their state’s debts.

At the opposite end of the TIA rankings are the “Sinkhole States,” including California (with $21,800 needed in additional levies from each tax-payer to settle outstanding debts), followed by Massachusetts ($24,900), Illinois ($38,800), and Connecticut and New Jersey, tied as the worst of the 50 states, with both needing $44,500.

There are 25 Sunshine and 25 Sinkhole states in the TIA rankings. But TIA has cautionary notes for residents of Sunshine and Sinkhole states. Those cautions recall Proverbs 11:1, which states that “a false balance is an abomination to the Lord, but a just weight is His delight.” The same view is expressed in Proverbs 20:23, and Leviticus 19:36.

“By definition, if a state has a balanced budget requirement, then spending should equal revenue during a specific year. Unfortunately, in government accounting, things are often not as they appear. Every state except Vermont has balanced budget requirements, yet even with these rules, states have accumulated $765 billion in money needed to pay bills,” the TIA analysis explains.

“How can states rack up debt while simultaneously balancing their budgets?” the report asks. “States balance budgets by using accounting tricks such as the following:”

• “Inflating revenue assumptions
• “Counting borrowed money as income
• “Understating the actual costs of government
• “Delaying the payment of current bills until the start of the next fiscal year so they aren’t included in the budget calculations.”

“The most common accounting trick states use is hiding a large portion of employee compensation costs from the budgeting process,” the report continues. “Employee compensation includes retirement benefits such as healthcare, life insurance, and pensions. States become obligated to pay for these benefits as employees earn them.”

The shifting by politicians of payment of present benefits to the future is a major factor in how state governments conceal their true financial condition. Illinois, for example, ranks as the 48th most indebted state overall. As The Washington Stand recently reported, Governor J.B. Pritzker (D) rails against President Donald Trump for allegedly “lying” about his federal budget policies while concealing his own role in a long-running accounting deception regarding Illinois’ massive unfunded pension liabilities.

Interestingly, eight of the 10 worst “Sinkhole” states in the TIA compilation voted for Democratic presidential candidate Kamala Harris in the 2024 election. These include New Jersey, Connecticut, Illinois, Massachusetts, California, Delaware, Maryland and Vermont. Louisiana and Kentucky are the only states among the 10 worst Sinkhole states where voters favored Trump in 2024.

A major reason why state government accounting reports cannot always be trusted to give a complete and trustworthy description of a jurisdiction’s financial health, according to TIA, is that politicians are not required to meet the same strict accounting standards that apply to private corporations and businesses.

“Government budgets need to be more accurate and precise. How governments currently calculate their budgets circumvents the objectives of the balanced budget requirements. Debt has been accumulated, and elected officials have incurred costs beyond the tax revenues collected, so these budgets were not balanced,” the TIA report explains.

“Governments can accumulate debt while claiming a balanced budget because most budgets are prepared on a cash basis. This antiquated accounting method records financial transactions only when cash is received or paid. As a result, budgets can be ‘balanced’ using loan proceeds, and expenses can be excluded if corresponding payments are not made,” the report continued. “Financial reports should help elected officials and citizens determine whether revenues were sufficient to pay for the services and benefits provided that year.”

One solution advocated by TIA is requiring state governments to comply in their financial accounting reports with the Employment Retirement Income Security Act (ERISA) that applies to private sector enterprises.

“In the past, employers, including large corporations, often took risks with employees’ retirement benefits and underfunded their plans. So, Congress passed ERISA to protect employees’ retirement accounts, but it exempted state and local governments from the same strict funding and reporting rules,” the TIA report noted.

“Truth in Accounting encourages elected officials to strengthen transparency and accountability by supporting reforms that would bring government pension plans under the same standards as private-sector plans. By applying ERISA-like principles to public pensions, elected leaders would be held accountable for fulfilling their contractual obligations to government employees, and taxpayers would gain a clearer understanding of the full cost of these long-term commitments,” the report said.