The receding economic tide this past year has revealed many city officials to be naked.
Oft-forgotten amid the COVID-19 chaos is that their fiscal crises predated the virus’s spread. According to Truth in Accounting (TIA), a nonprofit fiscal watchdog, 62 of the 75 largest U.S. cities were already in the red in 2019.
That statistic comes from the latest TIA “Financial State of the Cities” report (pdf), which came out in the last week of January. The authors’ objective is to provide citizens with easy-to-understand information and peer comparisons regarding their local governments’ finances.
The total liabilities of the 75 most-populated U.S. cities amounted to $333.5 billion at the end of the 2019 fiscal year. Defined pension and medical commitments make up the lion’s share of the unfunded debt.
Sunshine Cities vs. Sinkhole Cities
The TIA report delivered not a single “A” grade. In other words, no major U.S. city had a taxpayer surplus—available funds to pay bills divided by residents—of $10,000 or more.
However, one Californian city, Irvine, set an example and at least stayed above water. Retaining the title of the fiscally healthiest city for the second consecutive year, Irvine registered a taxpayer surplus of $4,100 per resident.
Even if Irvine posts a lower surplus in the following fiscal year, hit by the pandemic, it has enough resources to weather the storm. “Irvine’s elected officials have truly balanced their budgets,” the TIA team claims.
Washington, D.C., Lincoln, Stockton, and Charlotte follow Irvine. Together, they make up the top five “sunshine cities”—those with enough money to pay all their accumulated debt to date.