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- calendar_today November 6, 2026
Hawaii Sees Significant Drop in Debt Per Taxpayer
According to the latest analysis by the nonprofit group Truth in Accounting, Hawaii has made remarkable progress in reducing its debt per taxpayer. Five years ago, each taxpayer in the state carried a burden of $37,000. The newest figures from the 2026 Financial State of the States report show this amount has been slashed to approximately $4,500 per taxpayer — a substantial improvement and a sign of positive momentum in state financial health.
Understanding the Debt Calculation
The debt per taxpayer metric is calculated by totaling the state’s available assets (such as cash) and subtracting the obligations that must be paid. These obligations include not just bond debt but also commitments to pay state retirees’ pensions through the Employees’ Retirement System (ERS), and to provide health care for life via the Hawaii Employer-Union Health Benefits Trust Fund (EUTF). Debt tied to capital assets like land or buildings is not included in this calculation, as these assets are not counted in the available funds.
Improved Revenues, Ongoing Obligations
The report highlights that Hawaii’s financial position improved significantly in fiscal year 2025, with revenues outpacing expenses. Taxes made up 54.2% of the state’s total revenues, and grants and contributions — including federal aid — contributed 27.9%. Despite these gains, the report cautions that Hawaii continues to struggle with long-term obligations, specifically unfunded pension and retiree health care liabilities. The Employees’ Retirement System of Hawaii has not released its 2025 financial reports, raising concerns regarding financial transparency and effective oversight of pension plans.
Federal Grants and Financial Oversight
Federal grants are a major part of Hawaii’s revenue, with the state receiving about $6.6 billion in such funds, which comprised 27% of its income. Receiving significant federal monies requires the state to undergo a Single Audit, which is designed as a key safeguard against fraud and misuse. Auditors have found that Hawaii is unusually reliant on audit corrections to ensure the accuracy of its financial statements. Persistent issues highlighted by the audit include technology problems, delays in distributing federal funds, and statewide staffing shortages. These findings point to deficiencies in the state’s systemic control and coordination across multiple agencies.
Persistent Weaknesses and the Importance of Timely Information
The report also underlines the concern that when auditors are required to make major corrections at the end of the fiscal year, the interim financial statements issued throughout the year are less reliable. State department heads and lawmakers depend on these interim statements to make informed decisions, so inaccuracies can have significant implications for effective financial management. Furthermore, delays in producing key financial reports, such as the 2025 ERS annual report, reduce the usefulness of financial information and hinder timely policy responses.
History of Financial Difficulties and a Cautious Path Forward
Historically, Hawaii has struggled with its financial management, ranking sixth worst in the nation for state financial health in 2016, and tenth worst in 2021, according to previous Truth in Accounting analyses. The current improvements suggest Hawaii may have escaped the ranks of so-called “Zombie States” that lack sound financial direction. However, the report stresses the importance of continued vigilance to ensure the state’s progress is not reversed and that remaining systemic financial challenges are addressed effectively.
Source: hawaiireporter.com.
