Maryland ranked as the 11th most indebted state in the nation between 2020 and 2022, according to a recent study by the Reason Foundation, a libertarian think tank. Despite being 19th in population with over 6 million residents, Maryland’s total liabilities exceeded $60 billion during this period.
This trend highlights that state debt levels don’t always align with population size. For example, California, the most populous state with 39 million residents, carried the highest debt at nearly $500 billion—more than double the next four most indebted states combined. Smaller states like Maryland and Connecticut also ranked disproportionately high in total liabilities.
Maryland dropped to 14th when liabilities were assessed per capita, with residents theoretically owing $9,773 each if the debt were evenly distributed. By comparison, Connecticut topped the per capita rankings, with each resident owing more than $27,000.
Unfunded Liabilities Drive Maryland’s Debt
Geoffrey Lawrence, Research Director at the Reason Foundation, attributed Maryland’s debt to unfunded pension and retiree health care obligations. Despite experiencing rapid investment returns in fiduciary accounts during the post-pandemic stock market surge, Maryland’s total liabilities only declined by $5.2 billion between 2020 and 2022, from $65.6 billion to $60.4 billion.
“The unfunded portion of the pension and retiree health care benefits the state has promised to employees declined by $9.4 billion,” Lawrence explained. “However, the state took on other forms of new debt, which offset some of this progress.”
Baltimore Among the Most Indebted U.S. Cities
Baltimore fared worse than Maryland as a whole, ranking sixth in debt per capita among the nation’s 100 largest cities. The city’s total liabilities from 2020 to 2022 were nearly $9 billion, equating to over $15,000 per resident.
Lawrence noted that Baltimore has made strides toward financial improvement. The city reduced spending by nearly $1,000 per capita during the same period while increasing revenue and paying down retiree healthcare obligations. “The city’s overall financial condition is improving,” Lawrence said. “City leaders should continue along this path.”
Counties Share the Burden
Baltimore County, Prince George’s County, and Montgomery County also faced significant debt challenges. Baltimore County ranked 12th among the nation’s most populous counties, with close to $9 billion in liabilities or over $10,000 per capita. Prince George’s County ranked 15th, owing over $8 billion, while Montgomery County came in 20th with $6.5 billion in liabilities.
Lawrence emphasized the dire financial situation of Baltimore and Prince George’s Counties, noting their debts significantly exceed the value of their assets. Baltimore County’s liabilities are 37.5% higher than its total asset value, while Prince George’s County’s debt exceeds its assets by 44.1%.
“These counties barely break even between revenue and current spending,” Lawrence said. “After servicing their debt obligations, their free cash flow is deeply negative.”
Outlook
While some progress has been made at the municipal level, Maryland’s overall debt levels reflect ongoing challenges in managing unfunded liabilities and balancing budgets. Continued efforts to reduce spending and increase revenue will be essential for improving the financial outlook for the state, its cities, and its counties.
