Nationwide Municipal Debt Reaches $1.4 Trillion
According to the Reason Foundation’s State and Local Government Finance Report, U.S. cities collectively report $1.4 trillion in total liabilities—an average of approximately $7,000 per resident. This debt includes both short-term obligations like unpaid bills and payroll, and long-term liabilities such as bonds, pensions, and retiree health care.
The five cities with the highest total liabilities are New York, Chicago, Los Angeles, the consolidated city and county of San Francisco, and Houston. These municipalities account for a significant portion of the total municipal debt, which itself represents 23% of all state and local government debt outlined in the report. The data has been made publicly available through the interactive GovFinance Dashboard.
Top Cities by Per Capita Debt
When comparing cities with populations of 10,000 or more, the city and county of San Francisco leads in per capita debt at an astounding $43,000 per resident. Other cities in the top five include Nantucket (MA), New York City, Ocean City (NJ), and Miami Beach.
These figures were compiled using audited financial reports for the fiscal year 2023 and reflect only cities and incorporated municipalities. The dashboard provides analysis for the top 50 cities in each category.
City-County Consolidations Impact Data
Several U.S. jurisdictions operate under unified city–county governments. These include San Francisco, Denver, Honolulu, Nashville, and New Orleans. Because their financial data reflect both city and county activities, comparisons with other municipalities can be challenging. These entities are listed in both city and county rankings to account for their dual roles.
Other consolidated governments include Jacksonville (FL), Louisville/Jefferson County (KY), Philadelphia (PA), and the District of Columbia. For reporting purposes, these entities are included in the municipal totals.
Long-Term Debt Dominates Municipal Finances
Approximately 85% of municipal debt is long-term, totaling around $1.2 trillion or $6,000 per capita. Long-term debt includes:
- Bonds, loans, and notes: 50%
- Unfunded pension liabilities: 25%
- Unfunded retiree health care (OPEB): 18%
- Accrued leave payouts and other obligations: 2%
New York, Chicago, Los Angeles, San Francisco, and Houston top the list for total long-term debt. In per capita terms, San Francisco again leads with $36,602 per resident, followed by Ocean City (NJ), Nantucket (MA), New York City, and Miami Beach.
Pension Liabilities Pose Significant Challenges
Cities owe nearly $300 billion in unfunded pension liabilities, representing about 25% of all long-term municipal debt. This translates to roughly $1,500 per capita nationwide. These liabilities emerge when cities underfund the retirement benefits promised to public employees.
New York City tops the list for total pension debt at $40 billion, followed by Chicago, Los Angeles, Phoenix, and Philadelphia. On a per capita basis, Chicago leads with $13,500 per resident. Other cities with high per capita pension debt include Beverly Hills, Miami Beach, Riverdale (IL), and Forest Park (IL).
OPEB Debt Adds to Fiscal Pressures
Other post-employment benefits (OPEB), primarily retiree health care, account for $215 billion in municipal debt—about 18% of long-term obligations and $1,100 per capita. These liabilities arise when cities pledge benefits without setting aside sufficient resources.
New York City holds the largest total OPEB debt at $95 billion, followed by San Francisco, Austin, Yonkers (NY), and Boston. On a per capita basis, Yonkers leads with $12,100 per resident, followed by Waltham (MA), New York, Hoboken (NJ), and Plattsburgh (NY).
Bonded Debt Accounts for Half of Long-Term Liabilities
Contractual debt—bonds, loans, and notes—comprise 50% of municipal long-term debt, totaling $608 billion or about $3,000 per capita. These forms of debt differ from pensions and OPEB in that they involve fixed repayment schedules.
New York City once again has the highest total bonded debt at $105 billion. Rounding out the top five are Los Angeles, Chicago, San Francisco, and Houston. Per capita, San Francisco leads at $27,900 per resident, followed by Celina (TX), Salt Lake City (UT), Nantucket (MA), and Washington, D.C.
Comprehensive Reporting and Data Coverage
The Reason Foundation’s report encompasses all 50 state governments and thousands of local entities, including over 2,000 counties, 8,000 cities, and 10,000 school districts. Together, these institutions serve 331 million Americans. The financial data is primarily sourced from annual comprehensive financial reports for the 2023 fiscal year—the most recent available.
Some cities and counties have yet to report 2023 data. The dashboard reflects the latest available information for each jurisdiction. Despite rigorous data collection, some discrepancies may exist. Readers are encouraged to report any errors they encounter.
This article is inspired by content from Original Source. It has been rephrased for originality. Images are credited to the original source.