Boston’s Financial Health Declines, Earning a “D” Grade

Boston’s financial condition worsened in fiscal year 2023, with the city facing a $2.9 billion shortfall. This equates to a Taxpayer Burden™ of $10,600, earning Boston a “D” grade and placing it among the nation’s “Sinkhole Cities,” according to Truth in Accounting’s latest report.

The city's financial position deteriorated by $870.5 million, largely due to increased pension liabilities and unrealized investment losses of 10.2%. As of December 2022, Boston’s unfunded pension liability doubled, highlighting growing financial risks. The city also reported a $3.53 billion shortfall in governmental activities, as expenses outpaced program revenues. While tax collections and unrestricted grants helped offset this deficit, Boston remains heavily reliant on volatile investment markets and escalating pension costs.
Key findings from the report include:

• Boston had $5.6 billion available to pay $8.4 billion in bills.
• The city’s financial shortfall amounted to $2.9 billion, leaving each taxpayer with a $10,600 burden.
• Pension investment losses and rising liabilities contributed to an $870.5 million decline in Boston’s finances.

Boston’s growing dependence on defined pension benefits and fluctuating market conditions underscores the need for prudent financial management. Addressing these financial risks will be critical to maintaining the city’s long-term fiscal health.

For those interested in a deeper dive into Boston’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.