Taxpayers in the 10 largest U.S. cities face an average burden of nearly $50,000 each to pay debt incurred by county, state and “off-balance-sheet” city government entities, according to a new report released by the nonprofit organization Truth in Accounting (TIA).
Chicago residents have the highest overall taxpayer burden in the country.
The taxpayer burden, TIA explains, is the amount that residents would have to pay to cover the government’s debt.
TIA argues that the comprehensive annual financial reports released by Chicago and other cities exclude significant underlying data from major government entities like entire school districts, transit agencies, housing authorities, and others. The trend appears to be nationwide for municipal ledgers, with the exception of New York City.
“Taxpayers are on the hook for the debts accrued by these underlying government entities, but you would not know it just by looking at the reported data for the city,” the report states.
TIA seeks “to educate and empower citizens with understandable, reliable, and transparent government financial information,” urging government transparency about budget processes that impact the taxpayer.
"The annual financial reports issued by state and local governments are called ‘Comprehensive Annual Financial Reports,’” Bill Bergman, director of research at TIA, The Center Square. But they “aren’t always all that comprehensive,” he says.
The City of Chicago’s report excludes the results for the Chicago Public Schools and other Chicago government entities like the Chicago Transit Authority “in its ‘comprehensive financial statements’,” Bergman notes.
“When you combine the accumulated debt for these entities with other obligations facing city taxpayers, like their share of county and state unfunded debt, the taxpayer burden facing Chicagoans runs more than three times higher than the amount implied by the city’s financial report alone. And Chicagoans face the highest taxpayer burden of any of the 10 largest cities in the nation."
The report analyzes financial data for the 10 largest U.S. cities to determine what overlapping financial entities cost taxpayers. It calculates the various debts (and surpluses, when available) at the city government level and divides them by the number of residents to determine a per-taxpayer burden.
Chicago has the highest taxpayer burden of $119,110, meaning this is what each taxpayer would owe to cover all of Chicago’s debt burden. Chicago’s debt burden is nearly 30 percent more than New York City’s taxpayer burden of $85,600, and more than double Los Angeles’ taxpayer burden of $56,390.
According to TIA’s Financial State of the Cities report released earlier this year, Chicago ranked 74th out of the 75 most populous U.S. cities with a taxpayer burden of $36,000 accounting for the taxpayer’s share of municipal debt. Ranking 75th was New York City, with a taxpayer burden of $64,100.
However, when the debt of all government entities, including county, city, and state are evaluated, Chicago’s taxpayer burden skyrockets to $119,110, while New York City’s taxpayer burden rises to $85,600, the report notes.
Each taxpayer’s share of the city’s debt is $36,000. According to the analysis, each taxpayer owes a combined $68,310 to cover debts for: Cook County ($9,890), Chicago public schools ($17,690), Chicago Transit Authority ($3,690), Chicago Park District ($1,190), Metro Water Reclamation District of Greater Chicago ($560), Chicago Community College District ($110), Chicago Housing Authority ($820),
Combined with state debt of $50,800, each taxpayer in Chicago owes $119,110.
“The City of Chicago is in significantly worse financial shape than it might first appear, and its taxpayers face the highest taxpayer burden in the country,” TIA states.
Chicago’s debt burden is also more than double – to nearly nine times – more than the combined taxpayer burdens of the remaining top ten cities analyzed by TIA: Philadelphia ($50,120), San Jose ($43,120), San Diego ($35,410), Dallas ($33,490), Houston ($22,940), San Antonio ($16,660), and Phoenix ($13,290).