A newly released report by Truth in Accounting, a think tank that analyzes government financial reporting, ranking America’s largest 75 cities, has placed the city of Irvine as #1 in fiscal strength, for the third straight year. Irvine earned the distinction of the most fiscally healthy large city in the United States based on calculations as to how a city would fare financially after all bills are paid.
A surplus score of $4,100 per taxpayer places Irvine at the top of only 12 cities recognized as “Sunshine Cities” — determined by the amount of money left over after all of a city’s bills are paid, divided by the estimated number of taxpayers in the city. According to the 2020 Financial State of the Cities (FSOC) report, Irvine’s money available to pay bills improved by more than $3 million from the previous fiscal year, with revenues exceeding expenses once again.
Unlike most cities, the city government has enough resources available to pay all of its bills, including public employees’ retirement benefits. This means elected officials have truly balanced their budgets with $626 million available in assets to pay $245.5 million worth of bills. The city also earned a B grade, landing in the top 16% of cities surveyed, in meeting balanced budget requirements, with a Taxpayer Surplus of $100-$10,000.
“The city of Irvine is proud to receive this distinction for the third consecutive year,” said Irvine Mayor Christina Shea, in a press alert. “This ranking confirms the City Council and city staff remain committed to ensuring resident tax dollars are being wisely managed. Maintaining a balanced budget, with the highest level of transparency, is essential to this City Council.”
This is the fourth annual FSOC report, a comprehensive analysis of the fiscal health of the nation’s 75 most populous cities based on fiscal year 2018 comprehensive annual financial reports (CAFRs). The total debt among the 75 most populous cities amounts to $323.2 billion — most coming from unfunded retiree benefit promises, such as pension and retiree healthcare liabilities.
Of the cities surveyed for the report, 63 do not have sufficient funds to pay their bills, resulting in taxpayer burdens and earning the majority either grades of C or D on their fiscal health. No cities were awarded an A grade, while four cities (Philadelphia, Honolulu, Chicago and New York City) ranked the least healthy nationwide, clocking in with an F and taxpayer burdens amounting to greater than $20,000.
TIA has been publishing the FSOC reports for five years. The first year included the 10 most populated cities. The second year increased to 50, and for the last three years that number has gone up to 75 most populated cities. The nonpartisan mission of TIA, a 501(c)(3) nonprofit, nonpartisan organization composed of business, community and academic leaders interested in improving government financial reporting, is to educate and empower citizens with understandable, reliable and transparent government financial information. TIA drew their data for the most recent report from fiscal year 2018 audited CAFRs.
What does all of this mean for Irvine residents?
“The largest benefit is that elected officials are being held accountable because they are only spending the taxes collected. Elected officials are also truly balancing their budget, not using accounting gimmicks to pretend their budgets are balanced while putting the city in debt. Unlike cities that have a taxpayer burden, residents of Irvine will not be paying taxes to cover prior years’ costs,” shared TIA founder and CEO Sheila Weinberg. In the press alert issued by the city of Irvine, she stated, “We need more city and state governments to use good accounting practices to truly balance their budgets.”
“In 2009, because states and cities were not including the full amount of their pension and retiree health care liabilities on their balance sheets, TIA started to recast government balance sheets as if those liabilities were included,” shares Weinberg. “We felt that without knowing the true financial condition of their governments, elected officials and the public could not make knowledge financial decisions. We took it upon ourselves to provide this information. At that point we started doing the Financial State of the 50 States and in 2014 we started to do the Financial State of the Cities.”
For Irvine, this is another feather in its cap since incorporation in 1971. The past few years have witnessed Irvine receive national recognition as one of America’s safest cities, with personal finance website WalletHub ranking Irvine #1 safest city in California in 2019, and most successful master-planned urban communities. To fully understand the city government’s true financial condition, TIA recommends visiting the data-z.org database, where all past reports can be viewed along with the latest figures. Irvine residents can certainly rest assured that elected city officials are balancing the budget truthfully and at the highest level of transparency.