(The Center Square) – A new report finds that Philadelphia’s budget deficit would cost each of the city’s 1.5 million residents $27,500 to balance, representing the fourth highest tax burden in the country.
Truth in Accounting released its fifth annual Financial State of the Cities analysis on Tuesday that compares the financial health of 75 of America’s most populous metros and calculates how much each resident would have to pay to cover all of their city’s bills. New York, Chicago, Honolulu, Philadelphia and Nashville round out the bottom five cities with the largest taxpayer burdens.
New York City’s taxpayer burden, the highest on the list, more than doubles Philadelphia’s rate, costing each of its 8.4 million residents $68,200. In total, 62 of the 75 cities analyzed failed to balance their budgets. Truth in Accounting said the cities owe more than $333 billion in unfunded debt, the majority of which tracks back to underfunding public pensions and other post-employment benefits (OPEB).
“For years we have been highlighting the poor financial condition of these cities, but elected officials continued their reckless ways,” said Sheila Weinberg, founder and CEO of Truth in Accounting. “Hopefully after the pandemic is over, elected officials in these cities will understand the importance of truly balancing their budgets and having their fiscal house in order so that they can weather a crisis.”
At the other end of the scale, the top five cities with a taxpayer surplus – Irvine, Calif., Washington D.C., Stockton, Calif., Lincoln, Neb., and Charlotte, N.C. – managed to maintain healthy funding levels for their pension and OPEBs.
The report also grades each of its cities on their fiscal management and health.
Although none received an A rating, 13 cities did score a B. Another 64 cities scored a C or a D and six, including Philadelphia, received a failing grade.
Truth in Accounting likened city officials’ habit of underfunding pensions to “charging earned benefits to a credit card without having the money to pay off the debt.” Instead, the funds are directed toward “politically popular programs,” leaving future taxpayers to cover the losses. The tactic only makes budgets appear balanced, the report concludes.
According to the report, Philadelphia’s $13.6 billion debt burden stems from unfunded retirement obligations. Of the $23.5 billion compensation promised to workers, the city is short $9.9 billion in pensions and 2.5 billion in health care benefits. The analysis determined the city also lacked any savings to weather the pandemic, meaning the debt burden will only grow with time.
Pittsburgh earned a D for its $1.6 billion deficit that would cost its 302,000 residents $16,000 each to balance. The city also delayed payments for retirement obligations to the tune of $824.4 million in pension and $462.5 million in health care benefits, according to the report. The city ranks 11th worst in the nation for its "taxpayer burden."