National Debts? Nah, Check Out These City Holes!

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According to a recent analysis, the majority of America’s biggest cities are insolvent and unable to meet their liabilities.

Truth in Account, a right-leaning think tank, determined in its eighth annual Financial State of the Cities Report that by 2022, 53 of the 75 largest cities in the United States will have more assets than liabilities.

The report states:

By the end of fiscal year 2022 53 cities didn’t have enough money for all their bills. To claim that their budgets are balanced, as required by law in 75 cities, elected officials haven’t included the actual costs associated with government in their calculations. They have instead shifted costs to future taxpayers.

The 75 cities combined had assets worth $307.4 billion that could be used to pay their bills. Their debt, which included unfunded promises for retirement benefits, totaled $595.3 billion. Pension debt totaled 175.9 billion dollars, while other post-employment benefits (OPEB), mainly retired health care, totaled 135.2 billion dollars.

According to the analysis, the largest obligation that large cities face is their pension obligations, which are more affordable when compared with the value of the investments.

As the U.S. economic recovery began, cities received and spent federal COVID-19 funds in 2022. They also collected additional tax revenues. These economic gains were offset, in part, by an increase in pension liabilities. This was largely due to the decrease in the market value of their pension investments.

In the last few years, market values have swung dramatically. This volatility will negatively impact the financial situation of most cities in 2022. It also impacts their pension investments.

Only one city out of 75 examined in the report received an A for fiscal health. The most common grade is D, followed closely by C and B.

The cities’ respective burden on taxpayers is also analyzed. This means how much each taxpayer would need to pay to balance the budget.

Nine out of ten cities that have the highest tax burdens are led by Democrats. New York City is at the top of the list with a -$61.800, followed by Chicago ( -$42.900), Honolulu( -$24.200), Philadelphia( -$20.400), Portland ( -$20.100), New Orleans( -$18.200), Miami ( -$15.500), Milwaukee ( -$15.300), Baltimore ( -$14.100), and Pittsburgh.

There was some good news. Some cities had a surplus of taxpayers, which meant they could give each taxpayer a certain amount and still maintain a balanced budget. Washington, D.C., Irvine, California, Plano, Texas, Lincoln, Nebraska, and Oklahoma City were the five cities that had the largest surpluses.


The report admits to its limitations. For example, 2022 was the peak year of COVID-19’s recovery. It also points out that these cities all received billions of dollars in federal funds to help balance their budgets.

 

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