Yes, a few U.S. states report no tax-backed bond debt in some years, but other long-term obligations can still exist.
People ask “are any states not in debt?” because “state debt” gets used for different things. One writer means bonds. Another means pension promises. Another means every bill due at year end. If you don’t lock the definition, two honest answers can clash.
This guide breaks down the main debt buckets, shows how “no debt” claims happen, and walks you through a quick check using a state’s audited annual report.
What “state debt” can mean
States borrow for roads, buildings, and cash-flow timing. They also carry promises that behave like debt even when they aren’t bonds. The U.S. Census Bureau uses a broad definition of government debt that includes long-term credit obligations, including revenue bonds and general obligation bonds; the wording is spelled out in the Census “Debt” definition.
When people say a state has “no debt,” they usually mean one narrow slice: no bonds repaid from broad statewide taxes. That claim can be true at a point in time. “No liabilities at all” can’t.
| Debt question people mean | What counts | Where you can check fast |
|---|---|---|
| No tax-backed bond debt | General obligation bonds and similar bonds repaid from broad taxes | State ACFR note on long-term obligations |
| No bonded debt at all | GO bonds plus revenue bonds issued by the state | Debt tables in audited statements |
| No net tax-backed debt | Tax-backed bonds minus cash and dedicated reserves | Debt profile section in ACFR or ratings deck |
| No “primary government” debt | Debt of the state government, not cities, counties, districts | Entity and component-unit notes |
| No pension-type obligations | Net pension liability for state plans | Pension note and required schedules |
| No retiree health obligations | OPEB liability for retiree medical and similar plans | OPEB note and actuarial section |
| No short-term borrowing | Tax anticipation notes, lines of credit, commercial paper | Cash management note |
| No payables pile-up | Accounts payable, claims payable, grants due | Balance sheet and note roll-forwards |
Are Any States Not In Debt?
Yes, there are cases where a state reports no tax-backed bond debt outstanding. The honest wording is time-stamped: “no outstanding general obligation bonds issued by the state at fiscal year end,” or “no net tax-backed debt,” depending on the source.
That label still has limits. Bond borrowing can start for one major project, then fade out after payoff. A state can also have no GO bonds but still have revenue bonds tied to a program, or long-term pension and retiree health liabilities reported under modern rules.
Why lists disagree
Lists split because they count different buckets. One may track only bonds issued by the state treasury. Another may subtract cash to get a “net” figure. A third may count pensions and retiree health promises, which are reported under standards like GASB Statement No. 68 for pensions.
If you’re comparing states, pick one definition and stick to it. Mixing a bond chart with a total-obligations chart creates noise that looks like a data error.
States not in debt by bond type and year
Start with the state’s latest ACFR (the audited annual report). In the long-term obligations note, look for a row for “general obligation bonds,” “tax-backed bonds,” or similar language. If the ending balance is zero, the state can accurately be described as having no tax-backed bond debt at that point in time.
Next, scan for revenue bonds and notes payable. Some states issue debt tied to fees, loans, or enterprise activity. That can be outside the “tax-backed” bucket while still being real debt.
Debt-free can mean “the state didn’t borrow,” not “nobody borrowed”
Residents also pay taxes to cities, counties, school districts, and special districts that borrow for projects. A state with no bonds can sit inside a state area with plenty of local debt.
So when someone says “Wyoming has no debt” or “South Dakota has no debt,” treat it as a prompt to ask: no debt for which level of government, and for which category?
How to verify the claim in 15 minutes
Open the newest ACFR. Use search for “long-term” and “bonds payable.” Then work down the list.
Step 1: Find the long-term obligations note
The note usually includes a table with beginning balance, additions, reductions, and ending balance. Focus on the ending balance.
Step 2: Separate tax-backed from revenue-backed items
General obligation bonds tie repayment to broad taxing power. Revenue bonds tie repayment to a revenue stream like utility charges or loan repayments. Labels vary, so read the note text around the table, not only the row names.
Step 3: Check leases and subscription IT arrangements
Recent accounting rules moved many leases onto the balance sheet. That can lift reported long-term obligations even if bond borrowing is zero. If you only care about bonds, keep leases separate.
Step 4: Look at pensions and retiree health
Pensions and retiree health plans can produce large reported liabilities. These aren’t bonds, but they still represent benefits earned by workers. If your definition of “debt” includes these promises, a state with zero bond debt may still be “in debt” by your yardstick.
Step 5: Confirm the date
ACFR numbers are a snapshot at fiscal year end. A state can issue debt after that date. If a claim is dated, match it to the report year used.
After you run this check once, the question turns into, “Which bucket are we talking about, and what does the latest audit show?”
Why some states keep bond debt near zero
States that avoid tax-backed bonds often build steady reserves, phase projects, and lean on user fees where the law fits. Many also set tight internal caps on borrowing, even when state law allows more.
Paying cash can slow a project during lean years. Bond financing spreads cost across the years when people use the asset. Each path has trade-offs that show up in taxes and fees.
Pay-as-you-go budgeting
Some states treat capital spending like a monthly bill: they save, then pay. That reduces interest cost and keeps debt service from crowding other spending. It also demands discipline when revenue spikes.
Project financing through authorities
Even when the core state balance sheet shows no GO debt, an authority may issue revenue bonds for a university, a housing program, or a water project. Repayment is tied to program revenue, and reporting depends on the legal structure.
Using cash funds and earmarked revenue
Some projects get paid from dedicated revenue streams, like a fuel tax or trust fund earnings. That can cut the need for tax-backed borrowing, but it can also tie the project budget to one volatile stream.
What “not in debt” does not tell you
A zero bond-debt label doesn’t tell you if a state is cash-rich, if it defers repairs, or if it carries pension stress. It also doesn’t tell you how quickly revenue can drop in a downturn.
If you’re comparing fiscal strength, pair the bond view with cash reserves and long-term benefit obligations. That combo catches most of what headlines miss.
Quick checklist for reading a state report
This table helps you scan an ACFR without getting lost in jargon. It’s built for readers who want to sort bond debt from the rest in one sitting.
| What to scan | What it tells you | Fast follow-up |
|---|---|---|
| GO bonds ending balance | Tax-backed bond debt level | Check debt service schedule |
| Revenue bonds and notes | Project or program borrowing | Read pledged revenue language |
| Leases and subscription IT | Non-bond long-term payments | See term and rate details |
| Net pension liability | Retirement promises earned to date | Check funded ratio trend |
| OPEB liability | Retiree health promises | Check plan changes and funding |
| Unrestricted cash and investments | Liquidity for revenue shocks | Compare to annual spending |
| Debt limits or internal caps | Borrowing rules the state follows | Match to recent borrowing |
| Subsequent events note | Big items after year end | See if new debt was issued |
Answers people usually want behind the question
Is a zero bond balance safer?
Not automatically. Low bond debt reduces required debt service, which can help during a revenue drop. Yet pension and retiree health liabilities can still create long-term pressure.
Does no state bond debt mean low taxes?
No. Taxes depend on service levels, revenue choices, and the mix of state versus local responsibilities. A state can keep bond debt low while local governments borrow more for schools and roads.
Can a state get to zero bond debt fast?
Bond payoff takes time unless the state uses cash to redeem bonds early, which can carry call rules and added cost. The faster path is often “no new borrowing,” then letting old issues roll off over a decade or two.
How to use this when you read a headline list
If a headline says a state has “no debt,” treat it like shorthand. Ask which year the list uses, whether it counts only tax-backed bonds, and whether it skips pensions and retiree health liabilities. If the list doesn’t say, double-check with the state’s own audit.
When you do, you’ll usually find a clear answer: a state can be free of one kind of borrowing while still carrying other obligations. That’s the real takeaway behind “are any states not in debt?”