The city of Baltimore is struggling to pay off its crippling debt, and the burden on taxpayers is among the worst in the nation.
In a new report, the nonprofit group Truth in Accounting found that Baltimore would need $2.8 billion to get out of debt, or $13,200 from each taxpayer.
The TIA’s annual “Financial State of the Cities” report analyzed 2021 financial records from the 75 most populous cities in the U.S. Baltimore’s fiscal health is ranked 65th out of the 75 cities and received a letter grade of “D.”
According to the TIA, Baltimore has $6.2 billion in bills and only $3.4 billion available to pay those bills.
Baltimore’s financial situation appeared to be improving in 2021. It received over $100 million in federal COVID stimulus money, and its pension investments increased in value by 25%. The city’s debt was actually $1.7 billion less than it was in 2020.
But in 2022, the pensions decreased in value and federal money began to dry out. The TIA projects that this will either lead to a decrease in government services or to higher taxes.
Even when its pensions were performing well, the city did not set aside enough money to pay the benefits it promised to workers. Baltimore had set aside only enough to pay for 62% of future retiree healthcare benefits and 81% of pension benefits — and that 81% is based on an inflated 2021 pension performance, which has since worsened.
The TIA’s “Financial State of the States” report ranked Maryland 37th out of the 50 states. Maryland would need $13,100 from each taxpayer to pay off its $29 billion debt.
The city of Baltimore is struggling to pay off its crippling debt without burdening taxpayers. The nonprofit group Truth in Accounting recently ranked Baltimore 65th out of 75 major U.S. cities based on fiscal health. Maryland ranked 37th out of the 50 states. Baltimore has had a debt crisis for years, and it’s projected to only get worse. Last year, the city’s pension investments lost money, and residents could be on the hook.
Q: Let’s talk numbers. What’s the debt situation like in Baltimore, and how could that impact taxpayers?
A: The TIA audited Baltimore’s 2021 financial reports and gave the city a letter grade of “D,” because Baltimore needs an additional $2.8 billion to pay its bills. That means each taxpayer would be on the hook for $13,200.
A big reason is that the city hasn’t been setting aside enough money to pay for retirees’ health care benefits. Currently, Baltimore has only saved up 62% of the cash it needs for those benefits.
Q: How exactly did Baltimore get into this situation?
A: In 2021, it looked like Baltimore’s financial situation was improving, because federal COVID stimulus money was coming in and the city’s pension investments were performing well. But that turned out to be misleading. Baltimore’s pensions dropped in value in 2022 and the federal money dried up, leading to $2.8 billion in debt. That’s actually $1.7 billion less than in 2020, but it’s still not good enough.