San Jose, California ranks #54 in TIA’s latest report

A new report on the financial condition of the 75 most populous cities ranks San Jose no.54 in the nation for fiscal health. The report is based on the cities’ 2021 annual comprehensive financial reports, which are not analyzed on this scale by any other organization.

The analysis by Truth in Accounting (TIA), a nonprofit government finance watchdog group, found San Jose would need $2.2 billion to get out of the red, or $6,700 from each of its taxpayers.

According to the fiscal watchdog's annual Financial State of the Cities report, San Jose had $4.36 billion in bills and only $2.20 billion in available assets to pay those bills after capital and restricted assets are excluded. This resulted in a $2.2 billion shortfall, or a $6,700 Taxpayer Burden™, which is each taxpayer's share of the municipal debt after the city's available assets have been tapped.

After the Covid-pandemic, in large part due to unrealized gains in stock market valuation of its pension investments and federal government stimulus money, San Jose’s financial condition appeared to improve. Despite apparent improvements, San Jose had a Taxpayer Burden™ of $6,700, earning it a “D” grade from Truth in Accounting.

The city’s pension liability is calculated by subtracting earned and promised benefits from the market value of pension assets. Based on an exceptionally good year in the markets in 2021, the pension assets’ values were high. The result was a dramatic decrease in San Jose’s pension liability and a corresponding decrease in its money needed to pay bills. Even with inflated pension asset values, the city had set aside only 77 cents for every dollar of promised pension benefits and 46 cents for every dollar of promised retiree health care benefits.

You can read the full report here and San Jose's individual report here.