(The Center Square) – Nashville recently was named a "Bottom 5 Sinkhole City" by the nonpartisan think tank Truth in Accounting (TIA) in its fifth annual Financial State of the Cities report.
TIA examined the fiscal health of the 75 most-populous U.S. cities and graded and ranked the cities accordingly. The 2021 report is based on fiscal year 2019 comprehensive annual financial reports.
"At the end of the fiscal year 2019, 62 cities did not have enough money to pay all their bills," the report's executive summary read. "This means that to balance the budget, elected officials did not include the true costs of the government in their budget calculations and have pushed costs onto future taxpayers."
Nashville was among the bottom five of those 62 cities, earning it the "sinkhole" distinction. The city ranked 71st out of the 75 cities examined and earned an F grade.
TIA's analysis found Nashville had a debt burden of $4.3 billion, amounting to a tax burden of $22,000 for every taxpayer in the city. TIA divides the debt burden by the number of city taxpayers to determine the tax burden. Nashville had $3.4 billion available to pay $7.7 billion worth of bills, the TIA analysis found.
"Nashville’s financial problems stem mostly from unfunded retirement obligations that have accumulated over the years," the report said. "Of the $11.4 billion in retirement benefits promised, the city has not funded $409.8 million in pension and $4.8 billion in retiree health care benefits."
A Beacon Center of Tennessee analysis found Nashville had nearly twice as many employees per 1,000 residents as the more-populous cities of Louisville, Indianapolis and Jacksonville. Nashville city employees have defined benefit pension plans that do not require contributions from employees. That policy has cost taxpayers more than $696 million since 2015.
TIA's analysis found the total debt for the 75 most-populous cities was more than $333.5 billion. The four other "sinkhole" cities behind Nashville were Philadelphia ($25,700 tax burden per taxpayer), Honolulu ($29,600), Chicago ($41,100) and New York City ($68,200).
On the flip side, the top five "sunshine" cities with taxpayer surpluses were Irvine, California ($4,100 surplus per taxpayer); the District of Columbia ($3,400); Lincoln, Nebraska ($3,400); Stockton, California ($3,000); and Charlotte, North Carolina ($3,000).
Memphis was the only other Tennessee city in the TIA analysis. It ranked 39th and received a grade of C, having $1.7 billion to pay $2.5 billion worth of bills. The $810 million shortfall resulted in a taxpayer burden of $4,300.
"Of the $5.6 billion in retirement benefits promised, the city has not funded $566.7 million in pension and $684 million in retiree health care benefits," the report said.