Indianapolis Faces $1.1 Billion Shortfall, Earning a “C” Grade

Indianapolis’ financial condition worsened in fiscal year 2023, with the city facing a $1.1 billion shortfall. This equates to a Taxpayer Burden™ of $3,600, earning Indianapolis a “C” grade and classifying it as a “Sinkhole City” in Truth in Accounting’s latest report.

The city’s financial position declined by $69.2 million, though it remains more transparent than many other municipalities by using pension data aligned with its fiscal year-end. This ensures its financial reporting reflects the most up-to-date figures.
Despite financial challenges, Indianapolis' economy benefited from a strong tourism sector, with 29.2 million visitors in 2023—including 350,000 attending the Indy 500—contributing to a $5.6 billion economic impact. This revenue stream plays a crucial role in offsetting some of the city’s long-term financial obligations, including its growing pension debt.
Key findings from the report include:

• Indianapolis had $1.6 billion available to pay $2.7 billion in bills.
• The city’s financial shortfall amounted to $1.1 billion, leaving each taxpayer with a $3,600 burden.
• Up-to-date pension reporting improves transparency, but financial challenges persist.

While Indianapolis' tourism industry continues to boost its economy, addressing long-term financial shortfalls and pension liabilities will require careful fiscal management.

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