Phoenix’s Financial Condition Improves, Earning a “C” Grade

Phoenix’s financial condition showed improvement in fiscal year 2023, but the city still faced a $1.9 billion shortfall. This equates to a Taxpayer Burden™ of $3,200, earning Phoenix a “C” grade and classifying it as a “Sinkhole City” in Truth in Accounting’s latest report.

The city’s financial health improved by $455.1 million, largely due to higher tax revenues. State-shared revenues, particularly from income and sales taxes, provided a significant boost. Additionally, hosting Super Bowl LVII events helped drive increases in excise taxes from retail sales, construction activity, restaurant and bar spending, and hotel lodging. Phoenix also benefited from increased transportation program revenues due to investments in Valley Metro Rail Inc.
Despite these gains, Phoenix continues to face financial challenges related to its public safety retirement system. The city’s net pension liability increased by $213 million, driven in part by unrealized investment losses. This highlights the ongoing fiscal pressures associated with managing retirement system funding.
Key findings from the report include:

• Phoenix had $6.8 billion available to pay $8.7 billion in bills.
• The city’s financial shortfall amounted to $1.9 billion, leaving each taxpayer with a $3,200 burden.
• Revenue growth strengthened finances, but pension liabilities remain a long-term challenge.

While Phoenix’s financial outlook has improved, managing pension obligations and maintaining responsible fiscal planning will be key to ensuring long-term stability.

For those interested in a deeper dive into Phoenix’s finances—and how it compares to other major U.S. cities—you can read the full Financial State of the Cities 2025 report here.