New Jersey Owes $213 Billion: What That Debt Means for You

If you split New Jersey’s state government debt evenly among every resident, each of us would owe about $22,968. That’s not a hypothetical mortgage or a credit card balance – it’s the per-person share of the $213 billion in total liabilities the State of New Jersey reported at the end of its 2023 fiscal year.

This data is according to a new analysis from the Reason Foundation’s State and Local Government Finance Report.

Only one state in the country carries a heavier per-resident load: Connecticut, at roughly $26,187 per person. New Jersey and Connecticut are the only two states in America where state debt tops $20,000 per capita.

So what does that number actually mean, where does the debt come from, and why should everyday New Jerseyans care? Let’s break it down.

The Big Picture: How New Jersey Compares

Nationally, state governments collectively held about $2.7 trillion in debt at the end of 2023, roughly $8,000 per American.

New Jersey’s per-person figure is nearly triple that national average.

In raw dollars, New Jersey ranks fifth in the country for total state debt, behind only California ($497 billion), New York ($233 billion), Illinois ($223 billion), and Texas ($217 billion).

But here’s the important context, those are enormous states. California has more than four times New Jersey’s population; Texas has more than three times. When you adjust for population – which is the fairer way to compare – New Jersey jumps to second place in the nation.

For comparison, Texans carry about $7,443 in state debt per person, Pennsylvanians about $5,872, and Floridians just $3,334. At the other end of the spectrum, states like Tennessee, Utah, Nebraska, and South Dakota each owe less than $3,000 per resident.

What Counts as “State Debt,” Anyway?

When most people hear “government debt,” they picture bonds – the state borrowing money from investors to build roads, schools, or bridges. But bonds are only one piece of the puzzle, and in New Jersey’s case, a surprisingly small one.

Total state debt, as measured in this report, includes everything the state owes: short-term obligations like unpaid bills and payroll, plus long-term commitments that come due over decades.

Nationally, about 72% of state debt is long-term, and it breaks down into four main categories:

• bonds and loans
• unfunded pension promises
• unfunded retiree health care benefits
• accrued employee leave payouts

New Jersey holds about $197 billion in long-term debt, the third-most in the country. This equates to $21,197 per resident, second only to Connecticut.

Here’s where that money comes from.

Pension Debt: The $80 Billion Promise

The largest single chunk of New Jersey’s long-term debt is unfunded public pension liabilities – about $80 billion worth.

Here’s how pension debt works in plain terms: when the state hires a teacher, police officer, or public employee, part of their compensation is a promised pension when they retire. The state is supposed to set aside and invest money along the way so those funds are there when the bill comes due.

Pension debt is the gap between what’s been promised and what’s actually been saved.

New Jersey’s $80 billion gap is the third-largest in the nation, trailing only Illinois ($145 billion) and California ($90 billion). On a per-person basis, New Jersey lands in the top ten states nationally.

It’s worth noting this problem isn’t universal. Three states – New York, Washington, and South Dakota – actually reported more pension assets than liabilities at the end of 2023. Fully funding pensions is achievable; New Jersey has simply spent decades underfunding its systems, and the gap compounds over time.

Retiree Health Care: Where New Jersey Leads the Nation (Not in a Good Way)

If there’s one category where New Jersey truly stands out, it’s what accountants call OPEB — “other post-employment benefits,” which mostly means health care coverage promised to retired public workers.

New Jersey carries about $75 billion in OPEB debt, second only to California’s $82 billion. But adjusted for population, New Jersey’s $8,067 per resident is the highest in the entire country.

Why is this category so troubled?

Unlike pensions, which states at least attempt to pre-fund, retiree health benefits are rarely funded in advance at all. States promise the benefits, then largely pay the costs out of each year’s budget as they come due, meaning the full weight of decades of promises sits on the books as debt

The Surprising Part: New Jersey’s Bond Debt Is Relatively Modest

Here’s a twist most people wouldn’t expect. Traditional borrowed debt — bonds, loans, and notes with fixed repayment schedules — accounts for only about $27 billion of New Jersey’s total. That’s eighth in the nation, behind states like Massachusetts, Connecticut, and Washington, and far behind California’s $111.8 billion.

In other words, New Jersey’s debt problem isn’t primarily about borrowing too much for infrastructure. It’s overwhelmingly about retirement promises — pensions and health benefits — made to public employees over many decades without the money set aside to keep them.

Why This Matters to You

Every dollar that goes toward closing pension gaps or covering retiree health costs is a dollar that competes with school funding, NJ Transit, property tax relief, and everything else in the state budget.

Large unfunded liabilities can also affect the state’s credit rating, which influences how much it costs New Jersey to borrow for genuine needs like roads and bridges. On a good note, our credit rating for the state is sitting at Aa3 with Moody’s which means we are stable.

None of this means a crisis is imminent – these obligations come due over decades, not overnight. But it does explain a lot about New Jersey’s perennial budget squeeze, and it’s useful context every time you hear Trenton debate pension payments, benefit reforms, or a new borrowing plan.

The figures above come from the Reason Foundation’s State and Local Government Finance Report, which compiles data from each state’s own annual comprehensive financial reports.

The numbers reflect fiscal year 2023, the most recent year with complete data available. One more thing to keep in mind: these totals cover state government only. County, municipal, and school district debt is counted separately — so the full public-debt picture for New Jersey residents is larger still.

Source
Reason Foundation, State and Local Government Finance Report (govfinance.reason.org), October 2025