Washington, D.C.’s Financial Stability Holds, Earning a “B” Grade

Washington, D.C.’s financial condition declined in fiscal year 2023, but the city still maintained a $2.5 billion surplus. This equates to a Taxpayer Surplus™ of $9,000, earning Washington, D.C. a “B” grade and keeping its classification as a “Sunshine City” in Truth in Accounting’s latest report.

The city’s financial health took a hit as expenses surpassed revenues. The decline in total revenue was primarily driven by reduced charges for services and lower deed and property tax collections, reflecting a slowdown in sales and real estate financing.
However, Washington, D.C. remains financially strong due to its proactive approach to funding long-term obligations. The city has pre-funded 91% of its retiree healthcare benefits, far exceeding the funding levels of most municipalities. Additionally, its pension systems are nearly 100% funded, ensuring that promised benefits can be met while mitigating investment volatility risks.
Key findings from the report include:

• Washington, D.C. had $9.2 billion available to pay $6.7 billion in bills.
• The city’s financial surplus amounted to $2.5 billion, equating to a $9,000 Taxpayer Surplus™.
• Despite a revenue shortfall, D.C.’s pre-funded pension and retiree healthcare benefits strengthen its financial outlook.

Washington, D.C. continues to demonstrate sound financial management, but monitoring revenue trends and maintaining fiscal stability will be key to sustaining its long-term economic strength.
For those interested in a deeper dive into Washington, D.C.'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.