(The Center Square) – The cities of Aurora and Colorado Springs earned favorable financial grades, while Denver received a poor rating in a report by Truth in Accounting, a think tank that researches fiscal data.
Aurora ranked sixth out of 75 cities and received a “B” grade with a surplus of $2,400 per taxpayer. Colorado Springs ranked 22nd and was awarded a “B” with a surplus of $100 per taxpayer.
Only 21 cities (28%) earned a “B” as it required a government to have a surplus between $1 and $9,999 per taxpayer, according to the “2024 Financial State of the Cities” report.
Denver rated 50th and received a “D” grade as it had $6.4 billion available to pay $8.1 billion in bills, amounting to a burden of $6,400 per taxpayer. The report gave 22 cities (29%) “D” grades as the taxpayer burden was between $5,000 and $20,000.
There were five cities with a burden greater than $20,000 per taxpayer receiving an “F” grade.
Washington, D.C., was the top-rated city and the only government to earn an “A” rating with its surplus of $10,700 per taxpayer. New York City was rated 75th and had a burden of $61,800 per taxpayer as its financial condition worsened by $6.1 billion.
“Together, the 75 cities had $307.4 billion worth of assets available to pay bills; their debt, including unfunded retirement benefit promises, amounted to $595.3 billion,” the report said. “Pension debt totaled $175.9 billion and other post-employment benefits, mainly retiree health care, totaled $135.2 billion.”
Colorado Springs had $2.22 billion available to pay $2.21 billion in bills.
“Previously, Colorado Springs had a greater taxpayer surplus, suggesting city officials need to evaluate its current budgeting processes,” the report stated. “Continued market fluctuations, changing investment values, decreased COVID relief funds and a stabilizing economy may decrease revenue, including tax collections.”
Market volatility affected the worth of many government pension plans during the past few years, including Aurora.
“According to the city’s 2022 financial report, Aurora continued to spend federal COVID-19 relief funds and as the U.S. economy reopened, the city took in additional tax revenue,” the report stated. “Such economic gains were offset by decreases in the value of the city’s pension investments. Over the past few years investment market values have swung dramatically. In 2022 this volatility negatively impacted the city’s pension investments and financial condition, demonstrating the risk to taxpayers when their city offers defined pension benefits to its employees.”
TIA recommends pension plans be overfunded during market upturns so the plans can weather downturns in the market.
“Unfortunately, elected officials may see temporary, unrealized, overfunded status as an opportunity to reduce pension contributions and/or increase benefits,” the report said.
TIA said all 75 cities have balanced budget requirements to “avert future financial difficulties and enhance accountability.” The requirements are “meant to prevent elected officials from shifting the burden of paying for current-year services onto future-year taxpayers and avoid accumulating unsustainable debt.”
