70% of largest U.S. cities lack funds to cover costs; pensions and healthcare are majority of debt

Just the News ^ | February 20, 2024 | Bethany Blankley

[Twotone]

In fiscal 2022, 70 percent of the largest cities in the U.S. did not have enough money to pay their bills.

In the latest comprehensive analysis of the fiscal health of the 75 most populous cities in the U.S., 53 did not have enough money to pay all of their bills, according to a Truth in Accounting analysis of the latest annual comprehensive financial reports from 2022.

In its eighth annual Financial State of the Cities report, TIA found that the 75 largest cities in the U.S. had $307.4 billion worth of assets available to pay bills but their debt, including unfunded retirement benefit promises, totaled $595.3 billion.

Pension and healthcare debt accounted for the majority of debt owed, according to the analysis. Pension debt totaled $175.9 billion; other post-employment benefits (OPEB), mainly retiree health care, totaled $135.2 billion.

All 75 cities are required by law to have balanced budgets. For those with debt, in order to claim their budgets were balanced, TIA argues elected officials didn’t include all government costs in budget calculations, thereby pushing costs onto future taxpayers. Instead, they used “accounting tricks,” including “inflating revenue assumptions, counting borrowed money as income, understating the true costs of government, and delaying the payment of current bills until the start of the next fiscal year so they aren’t included in the budget calculations.”

“The most common accounting trick” used to understate costs is excluding “true compensation costs” of employee benefits like health care, life insurance, and pensions, the report explains.

“While pension and other post-employment costs, such as health care, will not be paid until the employees retire, they still represent current compensation costs earned and incurred throughout their tenure.” Cities should include these contributions in their budgets, TIA says.

TIA also found that some elected officials “have used portions of the money owed to pension and OPEB funds to keep taxes low and pay for politically popular programs. Instead of funding promised benefits now, politicians have charged them to future taxpayers” to appear to have a balanced budget while city debt increases, TIA said.

Some of the financial woes can be attributed to the market value of pensions, the report explains.

“In 2022, the cities continued to receive and spend federal COVID-19 relief funds, and as the U.S. economy reopened, they took in additional tax revenue. Such economic gains were offset by increases in their pension liabilities, which were caused in large part due to decreases in the market value of pension investments,” the report states. “Over the past few years, investment market values have swung dramatically. In 2022, this volatility negatively impacted most cities’ pension investments and their financial condition, which demonstrates the risk to taxpayers when cities offer defined pension benefits to their employees.”

To show how taxpayers are impacted by cities not having enough money to pay their bills, TIA divides the amount of revenue needed to cover unpaid costs by the estimated number of taxpayers. This calculates “a taxpayer burden.” When cities have funds left over after paying their bills, TIA divides the amount by the estimated number of taxpayers to calculate “a taxpayer surplus.”

Cities are also graded according to their fiscal health, taxpayer burden or surplus, balanced budget requirements, and other factors.

Of the 75 cities evaluated, only 1% received an A grade for fiscal health. The majority received D grades, followed by C and B grades, according to the analysis.

The five cities with the greatest surpluses were Washington, D.C. ($10,700), Irvine, California ($6,100), Plano, Texas ($5,100), Lincoln, Nebraska ($4,100), and Oklahoma City ($2,900). Rounding out the top ten with greatest surpluses were Aurora, Colorado; Fresno, California; Raleigh, North Carolina; Virginia Beach and Corpus Christi, Texas.

Of 22 cities reporting surpluses, the majority, six, were in California.

Of the 10 cities with the greatest taxpayer burden, nine are run by Democrats. New York City has the greatest taxpayer burden (-$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 (-$13,000).

New York City, which has historically ranked as the worst for fiscal health, attributed much of its financial woes to “COVID-19,” mentioning it 38 times in its financial report, according to the analysis. “Despite receiving $6.5 billion in COVID relief grants and a $1.3 billion increase in tax revenues,” TIA points out that New York City still needed $6.1 billion to pay its bills.

TIA notes that cities not properly funding pension and retiree health care promises “burdens future taxpayers and puts retirees at risk of not receiving promised benefits.”

[Mark]

Most public pensions are guaranteed and all of the court judges are on public pensions.

[cgbg]

“the legislature would rather spend the money on gifts to the voters”

like tampons in boy’s bathrooms in public schools.

Lol.

[linMcHlp]

Billionaires

- - - - - - - - -

California		186		Maryland		11		Montana		4
New York		135		Michigan		11		Indiana		3
Florida		78		Tennessee		11		Nebraska		3
Texas		73		Oklahoma		8		Oregon		3
Illinois		23		Missouri		7		Hawaii		2
Massachusetts		22		Ohio		7		Kansas		2
Georgia		18		Virginia		7		Mississippi		2
Pennsylvania		18		Wisconsin		7		Idaho		1
Nevada		17		Arkansas		6		Iowa		1
Connecticut		13		North Carolina		6		Kentucky		1
Washington		13		Utah		6		Louisiana		1
Colorado		12		Wyoming		6		Maine		1
Arizona		11		New Jersey		5		Rhode Island		1
District of Columbia(DC)		11		Minnesota		4		South Carolina		1
								South Dakota		1

- - - - - - - - -

[ETCM]

We’ll just print more money to bail them out.

[Mark was here]

I don’t care. Just as the Unions can go on strike, the cities can go on strike and not pay.

[linMcHlp]

All 75 cities are required by law to have balanced budgets.

[Twotone]

Just think of the GOOD those people could do if they’d stop wasting it on politics.

[KC_Conspirator]

They voted for it, but the sad fact is that normies who did not will have to pay for it.

[frank ballenger]

It is overdue time to send more billions of US taxpayer dollars to the cash strapped woke cities. 💲💲💲💲💲💲💲💲💲💲💲💲💲💲💲💲💲💲💲💲💲

[frank ballenger]

So well said by Thatcher.

There used to be a little color sticker showing a blood drop coming out from a turnip and the IRS logo on top.

[csn vinnie]

Well, they are just going to have to default on promised payments to citizens, in order to give all the illegals free room and board in the best hotels.

[Pol-92064]

Municipalities can file for Federal Bankruptcy protection. When Detroit went bankrupt the court cut pension payments to lower the city burden. The retired employees took a big hit.

[eyeamok]

Now you know why only 18% of High School Graduates can count.

[redgolum]

You can not as a society pay for three workforces, of which only one is producing.

We are heading to the bad times.

[dragnet2]

Years ago cities and states made deals of lucrative pensions and healthcare in lieu of big raises, essentially kicking the can down the road. Now they are running out of road.

Getting gold plated government pensions wasn't good enough for many, as they learned to totally pad and maximize those fat retirement packages by alleging injuries, alleged medical issues and doing lots of overtime in their final 12 months and other schemes to maximize those packages. Lots of fraud and corruption. It's become routine in some venues.