Most major California cities were in bad fiscal shape before the pandemic. Expect it to get worse

It’s a bit like hiding credit card bills under the mattress and declaring all is well: Cities, watchdog group says, aren’t including real government costs in budgets they present to the public .

In this financial house of mirrors, Truth in Accounting, a nonprofit, nonpartisan organization, is dedicated to translating inscrutable financial documents into a language anyone can understand.

Irvine City Hall (Tomoya Shimura, Orange County Registry/SCNG)

In the group’s fifth annual report card of the nation’s 75 largest cities, Irvine retains its title as America’s most fiscally sound city – even though the vast majority of its brethren, both in California and across the country, s ‘debt deeper thanks to promises they made for pensions and health care for retirees which are much more expensive than expected.

Joining Irvine in the dark were Stockton – a testament to the restorative power of municipal bankruptcy – and the city of Fresno.

In the red in California, from least indebted to most indebted, were Long Beach, Chula Vista, Bakersfield, Riverside, Sacramento, Los Angeles, San Diego, Santa Ana, Anaheim, San Jose, San Francisco, and Oakland.

In total, the total debt of the 75 most populous cities topped $333.5 billion at the end of fiscal year 2019. Most of that sum was pension debt — $180.1 billion — while the remainder was for retiree health benefits, at $160.1 billion.

Aerial view of homes in a neighborhood of Irvine taken August 5, 2010.

sunny cities

Beyond the beige that covers this planned metropolis, Irvine is a dynamo.

With more than 287,000 residents, this predominantly minority city – 43% Asian, 40% White, 10.3% Latino, 5% Mixed, 1.7% Black – has a population where nearly 70% of residents have a bachelor’s degree or higher and the median income is over $105,000 per year.

Fixing finances has long been a priority, officials said.

Irvine’s “taxpayer surplus” — the money available to pay all of its bills, divided by the number of residents — was $4,100 per person for the fiscal year ending in 2019.

This amount remained stable compared to the previous year, but is down from $4,400 in 2017 and $5,200 in 2016. Next year’s surplus is expected to decrease further due to the pandemic.

“Unlike most cities before the crisis, Irvine had more than enough available resources, $370.3 million, to pay all of its bills, including public employee retirement benefits,” the watchdog group said. . “It means Irvine’s elected officials have really balanced their budgets.”

Irvine savors the crown.

“The City of Irvine is proud to be recognized for maintaining a strong financial record for the fourth consecutive year, especially during the COVID-19 health crisis,” said Irvine Mayor Farrah N. Khan. in a press release. “This ranking confirms that City Council and City staff remain committed to ensuring that taxpayers’ money is managed wisely.”

Stockton was the fourth healthiest in the country, with a surplus of $3,000 per person. Fresno was No. 7 with a $2,300 per person overage.

Truth in Accounting calls them “sunny cities.” There are only 13 of them. The others are nicknamed “chasms”.

Chasm Cities

A large Long Beach sign outside the Long Beach Harbor Headquarters in the new Civic Center in 2019. (Photo by Scott Varley, Daily Breeze/SCNG)

The remaining 62 cities on the top 75 list are in the red, ahead of more than they have.

Long Beach, ranked No. 14 overall, was approaching the sun before the pandemic hit. In 2016, its per capita deficit was $1,500, but it had fallen significantly to just $100 per capita in the year under review.

“Long Beach entered the coronavirus pandemic in poor fiscal health, and will likely emerge from the crisis worse,” Truth in Accounting said. “Long Beach’s elected officials have repeatedly made financial decisions that have left the city with $20.2 million in debt.”

Riverside Town Hall (Photo by Google Maps)

Riverside, No. 28, had also made progress toward solvency. In 2017, it had a tax burden of $3,700 per person; which decreased to $3,100. It, too, was in poor fiscal health before the pandemic and will likely emerge from the crisis worse, the TIA said. Riverside elected officials left the city with a debt of $330.7 million.

Los Angeles, at No. 38, has also made solid progress. In 2014, his debt load was $8,000 per person. That’s been cut in half, to $4,000 per person – but it’s also expected to get worse. The city’s total debt burden was $5.1 billion before the pandemic hit.

Los Angeles City Hall is lit up in dark blue lights as Dodgers fans celebrate with fireworks in October. (AP Photo/Damian Dovarganes)

At No. 43, Santa Ana slipped. In 2016, its deficit per person was $3,400; which was yawning at $5,400 per capita. “Santa Ana entered the coronavirus pandemic in poor fiscal health, and it will likely emerge from the crisis worse,” TIA said. The city’s debt burden was $571.9 million.

The city, however, says the situation improved significantly by the end of fiscal 2020, dropping to $3,047 per capita. “Of this amount, $2,621 per resident is long-term debt amortized over many years, which will be funded in future periods,” spokesman Paul Eakins said by email. Current debt is $426 per resident, more than offset by cash and short-term receivables; and its general fund cash reserve balance topped $54 million, nearly a quarter of what it spends in a year. Even with the pandemic, Long Beach was able to preserve its service levels and add funds for public safety, he said.

Anaheim, home to the happiest place on earth and No. 47, had a deficit of $6,200 per person. That’s worse than 2016, when it was $5,300 per capita, but not as bad as 2017, when it was $7,200 per capita. It, too, entered the pandemic in poor fiscal health and is expected to suffer more. His debt burden was $696.1 million.

“We share and applaud the interest in the financial health of cities, although often reports like these can be too broad,” Anaheim spokesman Mike Lyster said. “Like many cities, Anaheim is facing pension obligations and real fiscal impacts from the pandemic.

Anaheim City Hall/File Photo

What is not captured is that Anaheim is a $2 billion municipal business with its own electric and water utility, public safety and convention center, and sports venues, which naturally entails obligations, as well as income, that other cities may not have. And while the pandemic has caused short-term issues for Anaheim, our long-term future is bright with major investments planned around our theme parks and sports venues and with millions of visitors waiting to return to our city once that it will be possible to do so safely.

New York tops

The worst city in America, again, was the Big Apple. New York had a staggering deficit of $68,200 per person. It has only increased since 2014 and is also expected to worsen after the pandemic.

Bernard P. Love