Recent analysis reveals that the majority of America’s largest cities, long under Democratic leadership, are financially strained, unable to cover all expenses in FY 2022.
According to The Center Square, the investigation revealed that “70% of the largest cities in the United States did not have enough money to pay their bills,” stating that the data originated from the “latest comprehensive analysis of the fiscal health of the 75 most populous cities in the United States,” 53 of them were bankrupt.
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Truth in Accounting (TIA) found in its ninth annual Financial State of the communities study that the nation’s 75 biggest communities have an estimated $307.4 billion in assets to pay their costs. But their overall debt, including unpaid retirement benefit obligations, came to $595.3 billion.
The majority of the debt was attributed to healthcare and pension commitments, according to the research. According to the outlet, which cited the TIA research, pension debt was $175.9 billion, while other post-employment benefits (OPEB), which mostly included retiree healthcare, was $135.2 billion.
The Center Square includes:
The statute mandates balanced budgets for each of the 75 communities. In order for debtors to say that their budgets were balanced, TIA contends that lawmakers failed to account for all government expenses when calculating budgets, shifting costs to future taxpayers. Rather, they employed “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.”
According to the report, “the most common accounting trick” used to understate costs is the omission of “true compensation costs” associated with employee benefits including health insurance, life insurance, and pensions.
“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,” According to the research, local officials should be factoring those donations into their budgets.
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