Wall Street’s biggest worry about New Jersey is the government’s $100 billion debt to its workers’ pension funds. But because of a shift in accounting rules, its unfunded obligation for retirees’ health care benefits has tripled — and is now nearly as large, Bloomberg News reported. The Garden State’s latest audited financial statements said that the new rules increased the estimate for what it owes for medical benefits to $97.1 billion in fiscal 2017, up from the $36.5 billion that it previously reported. While it dropped to $90.5 billion in 2018, that is still more than any other state, according to data compiled by Bloomberg, and amounts to about $10,000 for every New Jersey resident. Even California, with more than four times the population, doesn’t owe as much.
A South Carolina law meant to help the government collect debt is being used by hospitals to seize the tax refunds of people with unpaid medical bills, The Associated Press reported. Health organizations took at least $92.9 million in more than 172,000 seizures in 2017. The investigation of the Setoff Debt Program found it effectively allows hospitals to use the Department of Revenue as a debt collector. The state benefits by tacking on a $25 debtor fee to each seizure, collecting a total of $12.6 million in 2017. The South Carolina Association of Counties, a lobbying group for county governments, also collects $25 for processing each claim. Unpaid medical bills are the largest drivers of debt and bankruptcy for South Carolina’s poorest people.
The federal government reported a $146.9 billion deficit in March, causing annual debt to rise 15 percent for the first half of the budget year compared to the same period in 2018, the Associated Press reported. The Treasury Department said in its monthly report that the fiscal year deficit has so far totaled $691 billion, up from nearly $600 billion in 2018. The Treasury Department expects that the deficit will exceed $1 trillion when the fiscal year ends in September. Tax receipts are running slightly higher as more Americans are working and paying taxes, but the tax cuts signed into law by President Donald Trump in 2017 have meant that the $10 billion increase in receipts has failed to keep pace with a roughly $100 billion increase in government expenditures. The Congressional Budget Office was slightly more optimistic about the deficit in its January outlook, estimating that it would stay just below $1 trillion until 2022 when it would consistently stay above that total. Even as the budget deficit has risen, interest rates have stayed relatively low in a sign that investors are comfortable with the borrowing. The 10-year Treasury rate was 2.47 percent, down from nearly 2.8 percent a year ago.
