NEW YORK - October 24, 2011 - The total of U.S. state debt, including pension liabilities, could surpass $4 trillion, with Kalifornia owing the most and Vermont owing the least, a new analysis says.

The nonprofit State Budget Solutions combined states' major debt and future liabilities, primarily for pensions and employee healthcare, unemployment insurance loans, outstanding bonds, and projected fiscal 2011 budget gaps. It found that in total, states are in debt for $4.2 trillion.

The group, which follows state fiscal conditions and advocates for limited spending and taxes, said the deficit calculations that states make "do not offer a full picture of the states' liabilities and rely on budget gimmicks and accounting games to hide the extent of the deficit."

The housing bust, financial crisis, and economic Depression caused states' tax revenues to plunge, and huge holes have emerged in their budgets over the last few years. Because all states except Vermont must end their fiscal years with balanced budgets, states have scrambled to cut spending, hike taxes, borrow, and turn to the federal government for help.

Taxpayers are worried that states' poor fiscal health will persist for a long time and some Republicans in Congress have questioned whether the situation is worse than the states say.