Local government debt burden eased 2017-2024, but it is concentrated: DC, California, New York, Colorado, Texas and Nevada carry the heaviest loads

Summary

Nationally, the aggregate financial stress local governments carry from borrowing has eased, not worsened, between FY2017 and FY2024: debt outstanding fell relative to tax revenue (2.38x to 2.23x), interest paid on that debt fell as a share of tax revenue (8.9% to 7.6%), and in inflation-adjusted terms total local-government debt outstanding is about 8% lower in 2024 than an inflation-matched 2017 baseline, even though the nominal dollar figure rose. But that national average hides sharp geographic concentration: on a per-resident basis, local-government debt is far higher in Washington DC, California, New York, Colorado, and Texas; measured against each state's own tax base, Nevada, California, Texas, Tennessee, and Arkansas carry the heaviest relative loads; and on interest burden (debt service as a share of tax revenue), Kentucky, Nevada, Texas, and Indiana stand out. The improving national trend is itself now at risk: 2025-2026 market commentary (Volcker Alliance, HilltopSecurities) describes record municipal bond issuance (~$600B in 2025) alongside rising downgrades and a fading of pandemic-era federal aid, meaning the easing this data shows through 2024 may not continue.

What counts as "fiscal stress from borrowing" here, and what was excluded from every figure

This analysis measures stress from local-government borrowing using three ratios computed from the Census Bureau's Annual Survey of Local Government Finances (aggregated over counties, cities, townships, special districts, and independent school districts — state governments' own debt is excluded throughout). Every dollar figure and ratio in this report also excludes the five U.S. territory FIPS codes (60 American Samoa, 66 Guam, 69 Northern Mariana Islands, 72 Puerto Rico, 78 U.S. Virgin Islands) — the Census finance survey does not treat them as states, and including them would mix a different governance and tax structure into a 50-state comparison. The national FY2017-FY2024 trend figures (the debt-to-tax and interest-to-tax ratios, and the $1,662.8B / $1,988.9B / $1,954.2B national debt totals) additionally exclude the District of Columbia (FIPS 11) from the 50-state sums and averages, because DC is a single consolidated city-county-state government whose per-unit debt figures ($20,279-$31,461 per resident, 3-8x any state) would distort a 50-unit national total; DC is shown separately, labeled, in the per-capita state ranking instead. This table does not carry short-term debt or unfunded pension/OPEB obligations — a separate, and in many states larger, source of long-run local fiscal stress this dataset cannot speak to (see below).

Data quality note (a genuine defect found while building this): the same table's 2012 vintage is badly under-populated — it shows only 193 reporting cities nationally versus ~19,400 in the 2017 and 2022 Census-of-Governments years — which produces implausible state-level swings (e.g. one state's reported debt falling 96% between 2012 and 2022). 2012 was therefore dropped entirely from this analysis; all figures below use 2017 through 2024, and the two full-enumeration years (2017, 2022) anchor the state-level comparison.

The national trend: stress eased 2017-2022, then flattened

Summed across the 50 states (territories FIPS 60/66/69/72/78 and DC FIPS 11 excluded, as noted above), local-government debt outstanding rose from $1,662.8B (2017) to $1,988.9B (2022) and $1,954.2B (2024) in nominal dollars — a 17.5% nominal increase over seven years. But local tax revenue rose faster: from $699.3B (2017) to $886.8B (2022) and $877.6B (2024), up 25.5%, driven by inflation and a post-pandemic revenue surge (including federal aid that flowed through state and local tax bases). As a result the debt-to-tax ratio fell from 2.38x to about 2.23x, and interest paid on debt fell from 8.9% to 7.6% of tax revenue. In real (2024) dollars, the $1,662.8B of 2017 debt is equivalent to $2,128.0B today (using the BLS CPI-U deflator), while actual 2024 debt is $1,954.2B — an 8.2% real decline.

Where it is worst: state-level breakdown, FY2022

Using FY2022 (a full Census-of-Governments enumeration year, so every state is measured on the same basis rather than a smaller sample; territories excluded as above, DC retained and labeled separately here since this is a per-unit ranking, not a national sum):

• Debt per resident is highest in DC ($31,461 — an outlier, not a normal local-government layer), then California ($10,206), New York ($9,740), Colorado ($9,157), Texas ($8,783), Washington ($7,798), Illinois ($7,298), Nebraska ($7,124), North Dakota ($6,170), and New Mexico ($6,088). The national median across the 50 states is roughly $4,200-4,500 per resident.
• Debt relative to the state's own tax base (debt-to-tax ratio) is highest in Nevada (3.35x), California (3.31x), Texas (3.21x), Tennessee (3.11x), and Arkansas (3.09x) — a different ranking than the per-capita one, since it controls for the size of each state's revenue base rather than its population.
• Interest burden (interest paid / tax revenue) is highest in Kentucky (12.5%), Nevada (11.8%), Texas (9.8%), Indiana (9.8%), and North Dakota (9.7%), versus a 50-state average of about 7.4% in 2022.

Nevada and Texas appear near the top on all three measures, which is the strongest evidence in this data of concentrated, multi-dimensional local fiscal stress from borrowing. California and New York carry the largest absolute per-capita debt loads but more moderate interest burdens, because their revenue bases are also unusually large relative to most states.

By type of local government

Nationally in FY2022, of roughly $2.01 trillion in local-government debt outstanding (50 states + DC; territories excluded as above): cities carried the largest share ($748B), followed by independent school districts ($525B), special districts ($440B), counties ($264B), and townships ($33B). School-district and special-district debt — much of it revenue bonds tied to specific capital projects or enrollment growth — has grown faster since 2017 than general-purpose city and county debt, though a full year-by-year breakdown by type was not run given the scope of this question.

What this data cannot show: pensions and the emerging 2025-2026 turn

Unfunded public pension and retiree health liabilities are, in many states, a larger source of local fiscal stress than bonded debt, and this Census finance table does not carry them at all — no query in this report attempted to compute a pension figure from this warehouse. Equable Institute's 2025 State of Pensions research reports unfunded public pension liabilities have declined roughly $3 trillion since 2020 nationally, driven by higher discount rates and strong markets — consistent in direction with the debt-side easing found here, though it is a different liability measured a different way and not verified against this warehouse.

Separately, 2025-2026 municipal-market commentary flags a turn that this dataset's window (through 2024) cannot yet show: record new issuance (~$600B in 2025, up roughly 20% year-over-year per Volcker Alliance reporting) at post-2022 interest rates, receding federal discretionary aid to states and localities, and municipal-bond rating downgrades outpacing upgrades in most months through early 2026 (HilltopSecurities, Cumberland Advisors). If new borrowing at higher coupon rates continues to replace low-rate debt issued before the 2022-2023 rate-hiking cycle, the interest-burden ratio this report shows easing through 2024 is a plausible candidate to reverse in the 2025-2027 data this table has not yet published.

What This Report Does Not Answer

• Coverage of pension/OPEB liabilities as a fiscal-stress dimension: This table only carries bonded/other debt (item 49U) and general-debt interest (I89); unfunded pension and retiree health liabilities are a separate, often larger, source of local fiscal stress not computed here — cited qualitatively from Equable Institute research instead, not verified against this warehouse

Every query behind this report

9 warehouse calls ran in this session, in order. Each is reproducible against the same snapshot.

SELECT item_code, count(*) as n, avg(amount_thousands) as avg_amt FROM fiscal.govt_finance_by_unit WHERE item_code IN ('19','21','25','44','84','89','91','92','93','94','F19','F21') AND year='2022' GROUP BY item_code ORDER BY item_code

SELECT item_code, count(*) as n, sum(amount_thousands) as tot FROM fiscal.govt_finance_by_unit WHERE "year"='2022' GROUP BY item_code ORDER BY item_code

SELECT state_fips, "year",
  SUM(CASE WHEN item_code='49U' THEN amount_thousands ELSE 0 END) AS debt_outstanding,
  SUM(CASE WHEN item_code='I89' THEN amount_thousands ELSE 0 END) AS interest_on_debt,
  SUM(CASE WHEN item_code IN ('T01','T09','T10','T11','T12','T13','T14','T15','T16','T19','T20','T21','T22','T23','T24','T25','T27','T28','T29','T40','T41','T50','T51','T53','T99') THEN amount_thousands ELSE 0 END) AS total_taxes
FROM fiscal.govt_finance_by_unit
WHERE gov_type_code IN ('1','2','3','4','5') AND "year" IN ('2012','2022')
GROUP BY state_fips, "year"
ORDER BY state_fips, "year"

SELECT "year", gov_type_name, count(distinct unit_id) as units, SUM(CASE WHEN item_code='49U' THEN amount_thousands ELSE 0 END) AS debt_outstanding
FROM fiscal.govt_finance_by_unit
WHERE gov_type_code IN ('1','2','3','4','5') AND "year" IN ('2012','2017','2022')
GROUP BY "year", gov_type_name ORDER BY "year", gov_type_name

SELECT state_fips, "year",
  SUM(CASE WHEN item_code='49U' THEN amount_thousands ELSE 0 END) AS debt_outstanding,
  SUM(CASE WHEN item_code='I89' THEN amount_thousands ELSE 0 END) AS interest_on_debt,
  SUM(CASE WHEN item_code IN ('T01','T09','T10','T11','T12','T13','T14','T15','T16','T19','T20','T21','T22','T23','T24','T25','T27','T28','T29','T40','T41','T50','T51','T53','T99') THEN amount_thousands ELSE 0 END) AS total_taxes,
  count(distinct unit_id) as n_units
FROM fiscal.govt_finance_by_unit
WHERE gov_type_code IN ('1','2','3','4','5') AND "year" IN ('2017','2022') AND state_fips NOT IN ('60','66','69','72','78')
GROUP BY state_fips, "year"
ORDER BY state_fips, "year"

SELECT state as state_fips, population FROM census.pep_population WHERE "year"='2022' AND geography='state' AND county IS NULL

WITH debt AS (
  SELECT state_fips, "year",
    SUM(CASE WHEN item_code='49U' THEN amount_thousands ELSE 0 END) AS debt_outstanding,
    SUM(CASE WHEN item_code='I89' THEN amount_thousands ELSE 0 END) AS interest_on_debt,
    SUM(CASE WHEN item_code IN ('T01','T09','T10','T11','T12','T13','T14','T15','T16','T19','T20','T21','T22','T23','T24','T25','T27','T28','T29','T40','T41','T50','T51','T53','T99') THEN amount_thousands ELSE 0 END) AS total_taxes
  FROM fiscal.govt_finance_by_unit
  WHERE gov_type_code IN ('1','2','3','4','5') AND "year" IN ('2017','2022') AND state_fips NOT IN ('60','66','69','72','78')
  GROUP BY state_fips, "year"
), pop AS (
  SELECT state AS state_fips, population FROM census.pep_population WHERE "year"='2022' AND geography='state' AND county IS NULL
)
SELECT d.state_fips, d."year", d.debt_outstanding, d.interest_on_debt, d.total_taxes, p.population,
  1000.0*d.debt_outstanding/NULLIF(p.population,0) AS debt_per_capita,
  1.0*d.debt_outstanding/NULLIF(d.total_taxes,0) AS debt_to_tax_ratio,
  1.0*d.interest_on_debt/NULLIF(d.total_taxes,0) AS interest_burden_ratio
FROM debt d JOIN pop p ON d.state_fips=p.state_fips
ORDER BY d."year", debt_per_capita DESC

SELECT "year",
  SUM(CASE WHEN item_code='49U' THEN amount_thousands ELSE 0 END) AS debt_outstanding,
  SUM(CASE WHEN item_code='I89' THEN amount_thousands ELSE 0 END) AS interest_on_debt,
  SUM(CASE WHEN item_code IN ('T01','T09','T10','T11','T12','T13','T14','T15','T16','T19','T20','T21','T22','T23','T24','T25','T27','T28','T29','T40','T41','T50','T51','T53','T99') THEN amount_thousands ELSE 0 END) AS total_taxes
FROM fiscal.govt_finance_by_unit
WHERE gov_type_code IN ('1','2','3','4','5') AND "year" IN ('2017','2022') AND state_fips NOT IN ('60','66','69','72','78','11')
GROUP BY "year" ORDER BY "year"

SELECT "year",
  SUM(CASE WHEN item_code='49U' THEN amount_thousands ELSE 0 END) AS debt_outstanding,
  SUM(CASE WHEN item_code='I89' THEN amount_thousands ELSE 0 END) AS interest_on_debt,
  SUM(CASE WHEN item_code IN ('T01','T09','T10','T11','T12','T13','T14','T15','T16','T19','T20','T21','T22','T23','T24','T25','T27','T28','T29','T40','T41','T50','T51','T53','T99') THEN amount_thousands ELSE 0 END) AS total_taxes,
  count(distinct unit_id||gov_type_code) as units
FROM fiscal.govt_finance_by_unit
WHERE gov_type_code IN ('1','2','3','4','5') AND "year" IN ('2018','2019','2020','2021','2023','2024') AND state_fips NOT IN ('60','66','69','72','78','11')
GROUP BY "year" ORDER BY "year"