Despite what some Sacramento politicians might tell you, California is not known for its fiscal sustainability. Last year, the Golden State received an “F” for fiscal health from financial watchdog Truth in Accounting. The group calculated that California had a deficit of $264 billion, which translates to $21,100 per taxpayer. The analysis reverses the narrative that California is operating with a generous budget surplus.
Truth in accounting recently published their 2022 “City Tax Report”. The report examines the balance sheets of the seventy-five largest US cities, including fifteen Californian cities, which it analyzed using “Full Accrual Calculations and Techniques”.
Only three of California’s fifteen cities in the analysis had a “taxpayer surplus”: Irvine (ranked second overall in the country), Fresno (ranked eighth overall) and Long Beach (ranked thirteenth overall).
Irvine was found to have $435 million in assets to pay its bills, which is more than enough to cover the $155 billion in unfunded retirement benefits and $8 million in health care benefits. healthcare for retirees that the city will have to take care of. Irvine’s tax surplus was $4,700 for each taxpayer.
But a dozen Californian cities are in the red. Sacramento, Santa Ana, Los Angeles, San Diego and Anaheim have between $4,300 and $6,600 tax burden per taxpayer.
Los Angeles notably has $11 billion in unfunded retirement benefits and $2.4 billion in unfunded health care benefits for retirees. Truth in Accounting found that LA officials would need to find at least $8.3 billion to pay their debts.
But it’s even worse. Three California cities, all in the Bay Area, have at least $10,000 or more tax burden per taxpayer: San Jose, Oakland and (the worst) San Francisco.
San Jose has $3.5 billion in unfunded retirement benefits as well as $863 million in unfunded health care benefits for retirees, and would need $3.4 billion to pay its bills. Oakland executives need $2.4 billion to pay off their unfunded retiree pension and health care bills and other debts.
But the great champion of fiscal disaster in California is San Francisco. With $5.6 billion in unfunded retirement benefits and $3.9 billion in unfunded health care benefits for retirees, they are in the $19,000 hole per taxpayer.
Too many city leaders are like teenagers with unlimited credit cards. They promise city workers generous retirement benefits, then kick the streets, hoping that the politicians who come after them will foot the bill. But doomsday is approaching, and these cities must get their finances in order before a generation of city workers — police officers, firefighters and teachers — lose the retirement benefits they rely on.
You can find the fully summarized list: HERE
Brandon Ristoff is a policy analyst at the California Policy Center.