The problem with Socialism is that eventually you run out of other people's money.
Posted on 02/20/2024 3:02:32 PM PST by Twotone
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.”
“The most common accounting trick” used to understate costs is excluding “true compensation costs” of employee benefits like health care, life insurance, and pensions, the report explains.
“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.” Cities should include these contributions in their budgets, TIA says.
TIA also found that some elected officials “have used portions of the money owed to pension and OPEB funds to keep taxes low and pay for politically popular programs. Instead of funding promised benefits now, politicians have charged them to future taxpayers” to appear to have a balanced budget while city debt increases, TIA said.
Some of the financial woes can be attributed to the market value of pensions, the report explains.
“In 2022, the cities continued to receive and spend federal COVID-19 relief funds, and as the U.S. economy reopened, they took in additional tax revenue. Such economic gains were offset by increases in their pension liabilities, which were caused in large part due to decreases in the market value of pension investments,” the report states. “Over the past few years, investment market values have swung dramatically. In 2022, this volatility negatively impacted most cities’ pension investments and their financial condition, which demonstrates the risk to taxpayers when cities offer defined pension benefits to their employees.”
To show how taxpayers are impacted by cities not having enough money to pay their bills, TIA divides the amount of revenue needed to cover unpaid costs by the estimated number of taxpayers. This calculates “a taxpayer burden.” When cities have funds left over after paying their bills, TIA divides the amount by the estimated number of taxpayers to calculate “a taxpayer surplus.”
Cities are also graded according to their fiscal health, taxpayer burden or surplus, balanced budget requirements, and other factors.
Of the 75 cities evaluated, only 1% received an A grade for fiscal health. The majority received D grades, followed by C and B grades, according to the analysis.
The five cities with the greatest surpluses were Washington, D.C. ($10,700), Irvine, California ($6,100), Plano, Texas ($5,100), Lincoln, Nebraska ($4,100), and Oklahoma City ($2,900). Rounding out the top ten with greatest surpluses were Aurora, Colorado; Fresno, California; Raleigh, North Carolina; Virginia Beach and Corpus Christi, Texas.
Of 22 cities reporting surpluses, the majority, six, were in California.
Of the 10 cities with the greatest taxpayer burden, nine are run by Democrats. New York City has the greatest taxpayer burden (-$61,800), followed by Chicago (-$42,900), Honolulu (-$24,200), Philadelphia (-$20,400), Portland (-$20,100), New Orleans (-$18,200), Miami (-$15,500), Milwaukee (-$15,300), Baltimore (-$14,100), and Pittsburgh (-$13,000).
New York City, which has historically ranked as the worst for fiscal health, attributed much of its financial woes to “COVID-19,” mentioning it 38 times in its financial report, according to the analysis. “Despite receiving $6.5 billion in COVID relief grants and a $1.3 billion increase in tax revenues,” TIA points out that New York City still needed $6.1 billion to pay its bills.
TIA notes that cities not properly funding pension and retiree health care promises “burdens future taxpayers and puts retirees at risk of not receiving promised benefits.”
Of 22 cities reporting surpluses, the majority, six, were in California.
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I’m shocked!
They are large, they are DemocRAT, and they are (naturally) broke. Hmmmm...I wonder. Naaaaaaah.
Urban Doom Loop
I’m shocked that a supposed journalist would call 6 out of 22 a “majority.”
Democrats-Send in more illegals.
I read this book years ago about guaranteed pensions and the trouble they will cause
https://www.amazon.com/While-America-Aged-Bankrupted-Financial/dp/B001JQLN7I
While America Aged:
How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis
by Roger Lowenstein
In While America Aged , bestselling author Roger Lowenstein explains how corporations and governments ran up ruinous pension and health-care promises to workers—promises that are now coming due and that will hit America like a tsunami if nothing is done.Negotiating high benefits means gambling with future finances—and when the farm gets sold out from underneath major corporations or public institutions, it affects all of us, and in ways we might not imagine.
With his trademark narrative panache, Lowenstein unravels the truth about how pensions work in America and illuminates the impending crisis. While America Aged is comprised of three fascinating case studies— each an object lesson and a compelling historical saga.
The first goes back to the early days of the United Auto Workers and its crusading leader, Walter Reuther, to tell the story of how pensions and health-care obligations destroyed the American auto industry, in particular General Motors.
Lowenstein then shifts the scene to New York City to tell the story of the rise of public pensions and public sector unions through the vehicle of the Communist-led Transport Workers Union. Once again, justifiable benefits were followed by outrageous ones, such as the right to retire at age fifty. The saga reached a dramatic climax in 2005, when workers responded to proposed pension cutbacks with a massive strike that brought New York’s subways and buses to a screeching halt days before Christmas.
In the concluding episode, Lowenstein visits a metropolis even more reckless in doling out benefits—San Diego. Desperate not to impose higher taxes, city officials in this highly conservative enclave cut a series of deals with unions to short-change the retirement system and use pension funds to run the city. A massive scandal ensued—two mayors resigned, officials were indicted, and San Diego lost its bond rating.
Lowenstein warns that the pension wars that erupted in Detroit, New York City, and San Diego are only the first. But he also recognizes that workers are entitled to decent security in their retirement—a critical problem as the country ages. While America Aged explains how we came to this crisis, and it also proposes a way out. Arming readers with knowledge of the consequences of doing nothing, While America Aged , first and foremost, a call to action.
The problem with Socialism is that eventually you run out of other people's money.
A democrat is like a big baby with a big appetite on one end and no sense of responsibility at the other.
Democrats are only competent with failure. The examples are abundant and ridiculously illustrative.
There are nearly 500 cities in CA and a handful have surpluses? lol...
Maff be raciss n sheit.
Rule by government unions.
Well, on the bright side, the US has so much surplus money that they can pay the salaries, pensions and healthcare for most Ukraine public employees.
Word.
Years ago cities and states made deals of lucrative pensions and healthcare in lieu of big raises, essentially kicking the can down the road. Now they are running out of road.
our wonderful govt class....just the best for all of them, all the time, no downside, no Pension Guaranty Board for them...
We must put our own house in order before helping others. I cannot understand these politicians who say they love this nation work ceaselessly to destroy it. And we the public pat them on the back saying, “good job’ and vote or him.
The polls say Trump leads Biden 46%-44%. What is wrong with the 44% who support a president and administration bent on the ruination of the USA???
AND-—NOW A CALIF candidate wants MINIMUM WAGE TO BE $50 an hour.
Here in Connecticut we were way behind on funding pension liability. Governor Lamont, a Democrat but also a financier who understands numbers, pushed the legislature on funding the deficit.
We have come from the worst in the country to the middle of the pack, and our gov is determined to keep pushing them forward. Of course, the legislature would rather spend the money on gifts to the voters.
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