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Old 02-13-2018, 06:39 PM
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Mary Pat Campbell
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Philadelphia ranks near bottom of most populous U.S. cities for financial health
An analysis released in January found Philadelphia’s financial health to be third from last among the 75 most populous cities in the U.S.

The city ranked No. 73 in Truth in Accounting’s Financial State of the Cities 2018 report, which applied to the city’s 2016 financial report filings. Philadelphia topped only Chicago and New York City on the list.

The study gave Philadelphia a financial grade of “F,” because the city’s taxpayers would each need to contribute more than $20,000 to pay all of the city’s bills. In total, the study said the “Taxpayer Burden” for the city was $30,200 for every taxpayer, judging by the city’s debt burden. Philadelphia’s debt burden was listed at $16.2 billion by the study.

Bob Dick, senior policy analyst at Pennsylvania’s Commonwealth Foundation, said taxes in Philadelphia are especially burdensome for lower-income families.

“It is especially high for a family with an income of just $25,000, which is really burdensome considering that in many cases you have families who are just trying to scrape to get by,” Dick said.

Additionally, the study said Philadelphia’s problems are “driven by long-term debt and runaway entitlement obligations in two categories: pensions and retiree health care benefits.”

Philadelphia has $10.3 billion in unfunded pension promises to go along with $2.4 billion in unfunded retiree health care benefits, the report said. Philadelphia trailed only New York City and Chicago for worst in the nation.

Bill Bergman, research director for Truth in Accounting, said the federal government also is facing problems similar to Philadelphia.

“These issues are not isolated with state and local governments,” Bergman said. “The federal government is also afflicted by problems like this and what future taxpayers and citizens are facing at the federal level is even bigger than what they are facing at the state and local level.”

Truth in Accounting’s analysis also said Philadelphia has just $3.9 billion in assets available to pay $20.1 billion worth of bills. The city’s total assets are valued at about $15.5 billion, but capital and restricted assets are subtracted to get the study’s figure of $3.9 billion.

The study’s methodology said it excludes capital assets such as land, buildings, and infrastructure “because these should not be sold to pay bills.”

The study said the largest total for city bills comes in the form of the nearly $10.3 billion unfunded pension benefits. Bonds ($8.3 billion), other liabilities ($6.7 billion) and unfunded retiree health care ($2.4 billion) round out the cities $20.1 billion bill total. Debt related to capital assets (valued at $7.6 billion) was not included in the bill total.

A Philadelphia native, Dick said the city has potential to improve, if the change comes from entrepreneurs and people in the private sector.

“I want to be hopeful, I really do,” Dick said. “Philadelphia does have the infrastructure, does have the people, does have the institutions, to be a really great city, but it is just a matter of policy makers and special interests getting out of the way.

“If lawmakers, policy makers are focusing on something that is really going to improve the city, it is not going to be this big government program where government officials are taking the lead," he said. "It is going to be, again, getting out of the way of the people who can most effectively turn the city around and that is entrepreneurs and other working people in the private sector.”

Dick cited a few potential solutions for the city, including reducing the city’s tax burden.

“Reducing the overall tax burden in the city is important for job growth and wage growth as well as for increasing the population. Also, the school choice is a big issue as well.”

Bergmann said Truth in Accounting does not generally issue policy prescriptions, but encourages cities to adopt accrual-based budgeting going forward, doing best to accurately account for balanced budgets.

Philadelphia ranks as the fifth largest city in the U.S., with a total population of slightly more than 1.57 million people, according to Politifact. The city has gained population in the 2010 Census and 2016 Census estimate. Despite the recent growth, Philadelphia once had a population of 2.07 million in the 1950 Census, the last Census in which the city would show a population gain until 2010.

Further Census data for Philadelphia said the city’s median household income was $39,770 from 2012-2016, in 2016 dollars. Per-capita income in the city was $23,696. The city’s percent of peple in poverty was 25.3 percent, the data said.

When reached for comment, a spokesman with the Philadelphia mayor’s office said the city’s Finance department would have to decline immediate comment due to the finalizing of the city’s budget.


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