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Connecticut has once again landed near the bottom of the national rankings in Truth in Accounting’s Financial State of the States 2026 report, earning an F grade and placing 49th out of 50 states. The Chicago-based fiscal watchdog calculated that the state would need $57.7 billion to pay all of its bills, translating to a Taxpayer Burden of $41,400 per taxpayer.

According to the report, which draws on Connecticut’s audited 2025 Annual Comprehensive Financial Report and retirement system data, the state had roughly $23.8 billion in assets available to pay bills against $81.5 billion in total obligations. The largest drivers remain unfunded pension benefits ($31.5 billion) and unfunded retiree health care promises ($18.8 billion), along with bonds and other liabilities. Truth in Accounting’s methodology uses full-accrual accounting, excludes capital and restricted assets that cannot readily pay short-term bills, and divides any shortfall by the number of taxpayers with positive federal income tax liability.

The report notes some improvement in 2025, driven by a roughly $3.5 billion reduction in unfunded pension liabilities (aided by $1.37 billion in additional contributions beyond required amounts), higher tax revenues, and increased grants and contributions. Even so, the state remains a longstanding “sinkhole state.” The top and bottom five rankings were unchanged from the prior year, with New Jersey last at a $45,800 burden, followed by Connecticut, Illinois, Massachusetts, and California. By contrast, North Dakota led with a $72,300 Taxpayer Surplus.

Connecticut also received about $13.4 billion in federal grants, representing 28 percent of its revenue. Its Single Audit flagged a $185 million reporting error, $7.58 billion in flawed federal award reporting, $70 million in undocumented payroll oversight, Medicaid payments to deceased individuals, and multi-year gaps in audits of nursing homes and other agencies.

These findings arrive against a backdrop of repeated official claims of fiscal progress under Governor Ned Lamont and the Democrat supermajority. While the state has directed surplus funds toward pensions in recent years and seen some reduction in unfunded liabilities, Truth in Accounting’s long-running analysis has consistently placed Connecticut at or near the bottom.

Any government with a Taxpayer Burden above $20,000 automatically receives an F under the group’s grading scale. The persistent gap underscores how decades of underfunded promises—particularly for public employee pensions and retiree health care—continue to shift costs onto current and future taxpayers even as the state reports balanced budgets under cash-basis accounting rules.

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