Source: Fox News
Summary
A new report by Truth in Accounting ranks North Dakota as the state with the strongest financial position in the U.S., ending fiscal year 2025 with a $21 billion surplus. The state’s “Taxpayer Surplus” was $72,300 per taxpayer, according to the analysis. Twenty-four states lacked enough assets to cover their obligations, with New Jersey having the largest “Taxpayer Burden” at $45,800. The report highlights the growing financial divide between states, with North Dakota, Alaska, Wyoming, Utah, and Tennessee having surpluses. Long-term pension and health care obligations remain a challenge for many states.
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As expected, the matter has reached another stage.
North Dakota ends the year with a surplus.
New Jersey ends with a burden.
States with money keep it. States without money get deeper in debt.
Surpluses and burdens are just numbers, but they feel like fate.
Author: Evan Null
North Dakota’s Financial Standing
North Dakota topped the list of states with the strongest financial position, according to a report by Truth in Accounting. The state ended fiscal year 2025 with a $21 billion surplus, giving it the highest “Taxpayer Surplus” of $72,300 per taxpayer. This financial cushion is attributed to the state’s Legacy Fund, which was built using oil tax revenue.
The report shows that 24 states did not have enough assets to cover their financial obligations. New Jersey had the largest “Taxpayer Burden” at $45,800, followed by Connecticut, Illinois, Massachusetts, and California. These states face significant challenges in managing their finances, especially during economic downturns.
North Dakota was followed by Alaska, Wyoming, Utah, and Tennessee, all of which had taxpayer surpluses. The financial gap between these states and those with deficits is growing, with the latter facing tough choices about taxes, spending, and borrowing.
The report also highlights the impact of long-term retirement obligations on state finances. Across the country, states had $775 billion in unfunded pension liabilities and $490 billion in unfunded retiree health care obligations in fiscal 2025. Despite some improvements in 2025, the report warns that these gains can be reversed during market downturns.
North Dakota’s financial success is seen as a model for other states, with its strong investment returns and federal grant revenue helping to offset declines in energy tax revenues. The state’s ability to maintain a surplus amid economic uncertainty is a key factor in its financial stability.
State Financial Divides
The report shows a stark contrast between states with strong balance sheets and those with large unfunded debts. North Dakota’s financial position is in sharp contrast to states like New Jersey, which faces a $162.3 billion shortfall. This divide is expected to widen as economic conditions change and states face new financial pressures.
States with strong financial positions, like North Dakota, are better equipped to handle economic downturns, maintain public services, and meet retirement obligations. In contrast, states with large deficits may be forced to make difficult choices about taxes, spending, and borrowing when revenues fall.
The financial gap between states is not just a matter of numbers. It reflects deeper economic and policy differences that shape the long-term stability of each state. North Dakota’s success is seen as a result of its prudent financial management and strong investment strategies.
Other states, like Alaska, Wyoming, Utah, and Tennessee, also had surpluses, but the gap between these states and those with deficits remains significant. The report highlights the growing financial divide in the U.S. and the challenges that states with weak balance sheets face in the coming years.
The report also points to the importance of long-term planning and financial discipline in managing state budgets. While some states are able to build up surpluses, others continue to struggle with debt and unfunded liabilities, creating a growing imbalance in the financial landscape of the country.
Impact of Energy Revenue
North Dakota’s financial success is closely tied to its energy sector, particularly its oil tax revenue. The state’s Legacy Fund, built on this revenue, has played a key role in maintaining its strong financial position. However, the decline in energy prices has led to lower tax revenues, forcing the state to rely on other sources of income.
Despite this decline, North Dakota has managed to maintain its surplus through strong investment earnings and federal grant revenue. This ability to offset losses in one area with gains in another has helped the state avoid the financial challenges faced by many other states.
The state’s financial strategy highlights the importance of diversification in managing state budgets. By relying on a mix of revenue sources, North Dakota has been able to maintain stability even in the face of economic uncertainty. This approach is seen as a model for other states looking to improve their financial health.
Other states, however, have not been as successful in managing their finances. Many have struggled to balance their budgets, leading to growing deficits and increasing reliance on debt. This trend is expected to continue as economic conditions change and states face new financial pressures.
The role of energy revenue in North Dakota’s financial success underscores the broader challenges facing states that rely heavily on a single industry. While some states have been able to adapt and diversify, others continue to struggle with the volatility of their revenue sources.
Long-Term Financial Challenges
Long-term retirement obligations are a major source of financial pressure for many states. In fiscal 2025, states had $775 billion in unfunded pension liabilities and $490 billion in unfunded retiree health care obligations. These figures highlight the growing financial burden that states face as they try to meet their long-term commitments.
Despite these challenges, most states saw some improvement in their financial position in 2025. Strong investment returns helped boost pension assets and reduce unfunded pension obligations. However, the report warns that these gains can be reversed if market conditions worsen, leaving states vulnerable to sudden financial setbacks.
The report also notes that while some states have made progress in managing their finances, others continue to struggle with large deficits and growing debt. This imbalance is expected to persist as states face new economic challenges and rising costs.
North Dakota’s ability to maintain a surplus despite these challenges is seen as a sign of strong financial management. The state’s focus on long-term planning and prudent budgeting has helped it avoid the financial pitfalls that have affected many other states.
The growing financial divide between states is a key concern for policymakers and economists. As states with strong balance sheets continue to thrive, those with weak finances face increasing pressure to find solutions to their growing deficits and unfunded liabilities.
Financial Performance of States
The report by Truth in Accounting provides a detailed look at the financial performance of U.S. states, highlighting the stark differences between those with strong balance sheets and those with large deficits. North Dakota’s position at the top of the rankings is a testament to its financial discipline and strategic planning.
Other states, like Alaska, Wyoming, Utah, and Tennessee, also had surpluses, but the gap between these states and those with deficits is growing. States with large unfunded liabilities, such as New Jersey, Connecticut, Illinois, Massachusetts, and California, face significant financial challenges that could worsen in the coming years.
The report underscores the importance of long-term financial planning and the need for states to manage their budgets carefully. While some states have been able to build up surpluses, others continue to struggle with debt and unfunded obligations, creating a growing imbalance in the financial landscape of the country.
North Dakota’s success is seen as a model for other states, with its strong investment returns and federal grant revenue helping to offset declines in energy tax revenues. This ability to adapt and maintain financial stability is a key factor in the state’s continued success.
The growing financial divide between states is a key concern for policymakers and economists. As economic conditions change and new challenges arise, the ability of states to manage their finances will play a critical role in determining their long-term stability and success.
