Philadelphia Faces $10.3 Billion Shortfall, Earning a “D” Grade

Philadelphia’s financial condition showed some improvement in fiscal year 2023, but the city still faced a $10.3 billion shortfall. This equates to a Taxpayer Burden™ of $17,300, earning Philadelphia a “D” grade and classifying it as a “Sinkhole City” in Truth in Accounting’s latest report.

The city’s financial position improved by $884.1 million, largely due to a $200.1 million boost in revenue from the Opioid Settlement. Additionally, retiree healthcare benefit liabilities decreased by $357 million, thanks to a favorable adjustment in the interest rate used to calculate future benefit payments. However, these gains were partially offset by declines in general management charges ($101.9 million) and health service charges ($21.9 million), limiting overall revenue growth.
Despite these improvements, Philadelphia continues to struggle with significant long-term financial challenges, as it remains unable to cover its $10.3 billion in accumulated bills.
Key findings from the report include:

• Philadelphia had $10.3 billion available to pay $20.6 billion in bills.
• The city’s financial shortfall amounted to $10.3 billion, leaving each taxpayer with a $17,300 burden.
• Opioid settlement funds and lower retiree healthcare liabilities helped, but financial challenges persist.

Philadelphia must continue implementing fiscal strategies to manage its growing obligations and ensure long-term financial stability.
For those interested in a deeper dive into Philadelphia’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.