The U.S. Cities Drowning in Debt

The average person in the U.S. is around $96,400 in debt. If Americans would be charged by their hometowns and cities for the debt they have taken on in the name of their residents, a fairly big sum would be added to that tally. According to a report by think tank Truth in Accounting, 50 out of the 75 largest cities in the U.S. are currently running a deficit - in some cases a major one.

If New York City would divide the money amiss in its FY2021 budget among all of its taxpayers, this would add the hefty sum of $56,900 to each New Yorker's debt. However, New York City's debt has decreased - by more than 11 percent since 2017. In the rest of the top 5 indebted cities in the U.S., debt has been growing quite substantially. New Orleans, where debt grew by almost a third in the time frame, is one such example. This caused the city to rise from the 10th most in debt to the 5th most in debt. Portland meanwhile climbed from rank 8 into rank 4.

On the other side of the ranking are Washington D.C., San Francisco and Irvine, Calif. All three cities had a sizable surplus in FY2021 in part due to favorable market conditions. This instance will have helped them still balance their budgets in the downturn year of 2022.

Something that Truth in Accounting is pointing out in its reports is how high municipal debt can endanger city workers' pensions and similar benefits. In the case of New Orleans, the report states that only 55 cents for every dollar of pledged pension benefits had been put away in the city. In Portland, this number was even lower at only 44 cents to the dollar. Despite being obligated to pay employees' pension and retiree health care benefits when these come up, many cities decide to put off building these funds and even omit the respective items from city balance sheets.