(The Center Square) – Despite continuing to increase taxes on residents, five of Texas’ largest cities are in the red, according to an analysis by Truth in Accounting, a Chicago-based nonpartisan fiscal transparency think tank. Four of the five are run by Democrats.
Of the nine Texas cities evaluated, two are run by Republicans: Plano with a surplus and Fort Worth with a deficit.
Nationwide, the governments of 54 of the 75 most populous cities in the U.S. did not have enough money to pay all of their bills, according to TIA’s analysis of their latest available annual comprehensive financial reports (ACFR) from 2023.
Pension, healthcare and post-employment debt accounts for the majority of debt owed by cities, as has been the case in nearly all annual reports TIA has issued and The Center Square has reported on for nearly a decade. It was also true in Texas.
All of the cities have constitutional balanced budget requirements. In order to “claim their budgets were balanced – as is required by law in the 75 cities – elected officials have not included the full cost of the government in their budget calculations and have pushed costs onto future taxpayers,” TIA says.
Total debt for all 75 cities was $300.7 billion by the end of fiscal 2023, TIA found, The Center Square reported.
The report identifies “Sinkhole Cities,” those with the greatest budget shortfalls and taxpayer burden, and “Sunshine Cities,” those with surpluses. Those with surpluses received A and B grades; those with deficits received C-F grades.
No Texas cities received an A grade for fiscal health. Three received a B grade: Plano, Arlington and Corpus Christi. Three received D grades: Austin, Dallas, Houston; three received C grades: El Paso, Fort Worth and San Antonio.
Six of Texas’ largest cities were Sinkhole Cities with budget shortfalls and taxpayer burdens: Austin, Dallas, El Paso, Fort Worth, Houston and San Antonio.
Three were Sunshine Cities with surpluses: Arlington, Corpus Christi and Plano. In last year’s report, Corpus Christi, Plano and San Antonio had surpluses, The Center Square reported.
This year, Dallas replaced Austin with the worst taxpayer burden of $13,000, meaning each taxpayer would owe $13,000 to pay its budget shortfall for the city to break even.
Dallas ranked the 11th worst city for fiscal responsibility in the country. Its “financial condition worsened,” TIA said, with its $5.9 billion budget shortfall creating the highest taxpayer burden in the state.
Austin’s fiscal health ranked 13th worst nationwide. Its “financial condition worsened” over the year, TIA found. Its $3.9 billion budget shortfall resulted in a $11,700 taxpayer burden.
Although Houston’s financial condition “showed some improvement,” TIA found that it still needed $4.5 billion to cover its bills, resulting in a taxpayer burden of $5,700.
While Fort Worth’s “financial condition showed some improvement,” TIA found, it still needed $1.4 billion to cover its bills, resulting in a taxpayer burden of $4,100.
El Paso’s financial condition also worsened, TIA found. “Its financial hole deepened with a need for $526.4 million to cover its bills,” creating a taxpayer burden of $2,300.
San Antonio’s financial condition also worsened in one year, TIA notes, transitioning from a Sunshine City to a Sinkhole City. The city needed $730.8 million to cover its bills, resulting in a taxpayer burden of $1,400.
Nationwide, only three Texas cities ranked in the top 20 for fiscal health: Plano ranked 11, Arlington, 12 and Corpus Christi, 17, according to the analysis.
Plano’s financial condition worsened over the year, TIA found, but “it still had $223 million available to cover future bills,” resulting in a taxpayer surplus of $2,300.
Last year, TIA noted that Plano’s ranking may have been “artificially high because of the lack of timely pension data.” This year, it noted that unrealized losses from its pension system investments, reflecting broader market volatility, reduced available funds.
Arlington reported a $208.5 million surplus in fiscal 2023, which breaks down to $1,500 per taxpayer, according to the analysis.
Corpus Christi’s financial condition also worsened, but it still had $40.2 million available to cover future bills, or a $400 taxpayer surplus.
City officials in these cities and statewide have repeatedly increased taxes and spending, resulting in the legislature addressing a range of issues in the current legislative session.
