Contact: Katherine Oxenreiter, 312.589.5104
koxenreiter@truthinaccounting.org
CHICAGO – Truth in Accounting (TIA), a local think tank that analyzes government financial reporting, found that Chicago has the second highest taxpayer burden amongst the 20 most populous U.S. cities. Chicago’s taxpayer burden - the amount each taxpayer would have to pay for the city to be debt-free - comes out to a staggering $44,000.
To determine a city’s taxpayer burden, TIA researchers use a systematic and thorough approach to get a complete picture of the city’s finances. Unlike reporting done by city government officials, TIA’s data includes all promised liabilities such as retiree health care and pensions. According to TIA’s analysis, Chicago has committed to $33.8 billion in pension payments and $803 million for retiree health care benefits, but the city has not adequately funded these obligations.
This year, TIA has noticed a dramatic increase in reported pension liabilities. New financial standards require the city to list the bulk of its pension obligations on the balance sheet for the first time. This rule increases transparency, but also produces a massive jump in reported debt statistics. For example, Chicago’s reported pension liability increased from $8.6 billion in 2014 to $33.8 billion in 2015 – that’s a 293 percent increase.
“Truth in Accounting has called for this financial reporting policy change for years and it is nice to see city government officials report more accurate pension numbers,” said Sheila Weinberg, Founder and CEO of TIA. “However, there is still progress to be made, especially regarding Chicago’s concealed retiree health care debt.”
Although Chicago is now reporting all of the city’s pension debt, TIA researchers discovered that Chicago’s hidden retiree health care obligations amount to $588 million. When all unfunded liabilities and hidden debt are included, Chicago’s total debt amounts to $38.3 billion after available assets are deducted.
“Chicago’s debt is massive, and I urge Mayor Rahm Emanuel and his administration to acknowledge the city's true debt and address this situation immediately,” said Weinberg. “Taxpayers deserve to know the true financial condition of the city they live in and not foot the bill for accounting mistakes.”
Across all 20 cities, TIA researchers calculated a total of almost $263 billion in unfunded liabilities, a huge financial burden for current and future taxpayers. TIA believes high debt and taxpayer burden are not abstract numbers: they’re linked with lower quality of life, poor highway systems, and the slow home price recovery.
Here’s how the top 20 most populous U.S. cities compare by taxpayer burden (ranked best to worst):
- Charlotte: $3,300 (surplus)
- Columbus: $2,700
- San Diego: $2,900
- Austin: $3,000
- San Antonio: $3,300
- El Paso: $3,700
- Denver: $4,300
- Indianapolis: $4,300
- Phoenix: $5,000
- Jacksonville: $6,100
- Seattle: $6,600
- Los Angeles: $7,400
- San Jose: $9,100
- Fort Worth: $9,700
- Houston: $11,700
- San Francisco: $16,400
- Dallas: $16,900
- Philadelphia: $27,500
- Chicago: $44,000
- New York City: $61,000
Full details about Chicago’s finances can be found in The Financial State of Chicago.
The Financial State of the Cities examines the financial conditions of the 20 most populated cities nationwide. The data is derived from each city’s 2015 Comprehensive Annual Financial Report.
Founded in 2002, Truth in Accounting is dedicated to educating and empowering citizens with understandable, reliable, and transparent government financial information. Sheila Weinberg is a Certified Public Accountant with more than 30 years of experience in the field.
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