It's in the nature of the monetary system for these ratios to go exponential.
In the short term, something might give way, but in a few years, we'll be repeating this conversation as the debt level has surged exponentially. pic.twitter.com/mS05NNJ3UJ
— Phoenix Capital (@PhoenixCapitalH) February 15, 2024
70% of largest U.S. cities lack funds to cover costs; pensions and healthcare are majority of debt
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.