North Dakota has ranked first in the nation for state financial health, ending fiscal year 2025 with a $21 billion surplus, according to Truth in Accounting’s 2026 Financial State of the States report. The sparsely populated state holds the highest 'Taxpayer Surplus' in the country at $72,300 per taxpayer, a figure that reflects its share of the state's available assets rather than a direct refund to residents. The report highlights a growing divergence between states with robust financial cushions and those facing significant deficits.
The analysis indicates that 24 of the 50 U.S. states did not have enough available assets to cover their financial obligations at the end of fiscal 2025. This disparity is critical for long-term fiscal stability, as states with stronger balance sheets possess greater capacity to weather economic downturns, maintain public services, and meet retirement obligations without resorting to steep tax hikes or service cuts.
What the Right Is Saying
Conservative fiscal watchdogs point to North Dakota’s success as a model of fiscal responsibility driven by resource management and investment discipline. The state’s top ranking is attributed largely to its Legacy Fund, a sovereign wealth fund established with oil tax revenue. Although revenues from oil, gas, and coal declined due to lower energy prices, the report notes that strong investment earnings and federal grant revenue helped offset the drop. This outcome aligns with conservative arguments for saving resource revenues during boom periods and maintaining lower tax burdens. The report also highlights that North Dakota was followed by Alaska, Wyoming, Utah, and Tennessee, all of which posted taxpayer surpluses, reinforcing the narrative that states with limited government spending and diversified investment strategies are better positioned financially.
What the Left Is Saying
While the provided source material focuses primarily on the quantitative rankings, the data underscores systemic challenges often highlighted by progressive fiscal analysts, particularly regarding long-term liabilities. The report notes that states nationwide carried $775 billion in unfunded pension liabilities and $490 billion in unfunded retiree health care obligations in fiscal 2025. These figures illustrate the structural pressures on public employee benefits, a key concern for Democratic legislators who advocate for protecting social safety nets and public sector workers. The report cautions that recent improvements in pension funding were driven by strong investment returns, which are volatile and can reverse during market downturns, potentially exposing states to future fiscal crises if structural deficits remain unaddressed.
What the Numbers Show
According to the Truth in Accounting report, North Dakota’s $21 billion surplus translates to a $72,300 taxpayer surplus. The state was followed by Alaska, Wyoming, Utah, and Tennessee, with taxpayer surpluses ranging from $11,400 in Tennessee to $72,300 in North Dakota. Conversely, New Jersey ranked last with a $162.3 billion shortfall, resulting in a $45,800 taxpayer burden. Connecticut, Illinois, Massachusetts, and California rounded out the bottom five, with taxpayer burdens ranging from $16,000 in California to $45,800 in New Jersey. Nationally, states held $775 billion in unfunded pension liabilities and $490 billion in unfunded retiree health care obligations. Most states showed financial improvement in 2025 due to strong investment returns boosting pension assets, though these gains are noted as potentially reversible.
The Bottom Line
The widening gap between states with surpluses and those with deficits signals differing capacities to respond to future economic shocks. States like North Dakota and its top-five peers have built financial buffers through mechanisms like sovereign wealth funds and conservative budgeting, while states in the bottom five face substantial unfunded liabilities. The report emphasizes that while investment returns provided temporary relief to pension systems in 2025, the underlying structural issues remain. Policymakers in deficit states face complex decisions regarding taxes, spending, and borrowing to address the $775 billion in unfunded pension liabilities and $490 billion in unfunded retiree health care obligations, while surplus states have more flexibility to maintain services without immediate fiscal pressure.