Local NewsTaxes & SpendingTexas’ 9 Most Populous Cities Owe $21.6 Billion in Debt

Only Corpus Christi and Plano have enough money to pay their bills according to the analysis of municipal fiscal health.
February 15, 2022
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All but two of Texas’ nine most-populated cities owe thousands of dollars per taxpayer, according to an analysis by the right-leaning think tank Truth in Accounting (TIA).

Collectively, the municipalities owe over $2,400 per taxpayer, which amounts to $21.6 billion.

Using numbers from 2020, the analysis subtracts the costs cities face from their “assets available to pay bills” to reach the money available or needed to pay their bills.

Houston accounts for the largest slice of that — with $8.9 billion needed to pay the bills — followed by Dallas with $5 billion and Austin with $3 billion in payments owed.

MunicipalityMoney Available/Needed to Pay Bills (in billions)Unfunded Liability Total (in billions) Outlook per Taxpayer
Arlington-$0.08$0.3-$700
Austin-$3$6.5-$10,300
Corpus Christi$0.1$0.2$800
Dallas-$5$5.2-$12,700
El Paso-$1$0.8-$4,900
Fort Worth-$2.5$3.3-$9,300
Houston-$8.9$7.6-$13,200
Plano$0.2$0.1$2,700
San Antonio-$1.4$2.5-$3,100
Total-$21.58$26.5-$2,400

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Unfunded liabilities — money promised but not accounted for, most often for public pensions — are a large driver of fiscal imbalance. Across the country, 61 cities did not have enough money to pay their bills.

Of the nationwide debt total, Texas’ cities collectively account for just 6 percent. The bottom five cities in debt per taxpayer — New York City, Chicago, Honolulu, Philadelphia, and Portland — account for three-fourths of the total debt, with New York City totaling the largest portion at $204.4 billion.

For context, that is nine times more than the Texas cities listed, combined. The total per taxpayer among the Texas nine is far less than New York City’s.

The unfunded pension liabilities pile up because these local governments continuously make promises they cannot keep. Public pensions are a way to load employment cost to the backend and attract employees without providing commensurate salary levels as in the private sector.

Arlington’s public employee pension and El Paso’s police and fire pension are both actuarily sound, meaning there is not a negative imbalance between the amount promised and the amount paid.

Plano ranked well in the analysis largely because “the city’s retirement plans earned better-than-expected investment returns.”

But pensions are not the only causes of debt for localities. Only $4.9 billion of Houston’s total is tied to unfunded liabilities from the pension. The city’s health care benefit fund cannot account for $2.6 billion in promised funds. Houston also has sizable debt in state bonds and other unspecified liabilities according to the analysis.

The state’s largest city has only set aside 72 cents for every dollar promised in the pension and nothing for the retiree health care benefits fund.

Cities across the country received millions of dollars in federal coronavirus relief funds after coronavirus ripped an even bigger fiscal hole in many budgets. One of the stipulations of that money was that it may not be directly used to shore up underwater pension funds.

These cities in Texas are not in the dire straits of New York or Chicago, but the track record has shown that unfunded liabilities, and the debt they fuel, grow until the can may no longer be kicked down the road.

And then, either the entity raises taxes to close up the shortfall, or the pension system is drastically changed retroactively after the promises from the city to its employees have already been made.

Correction: An earlier version of this story misstated the collective debt per taxpayer between the nine Texas cities. We regret the error.

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Brad Johnson

Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.

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