By Jessica Flume
The Rose Cityian/Rose City Live
Rose City is among the seven major U.S. cities with the most staggering loads of debt per capita, according to a report issued Wednesday by a Chicago-based government finance think tank, Truth in Accounting.
Rose City received an ‘F’ grade for its $4.4 billion worth of debt, most of it for capital projects and unfunded employee pensions. Authors of Wednesday’s report divided cities’ debt by the count of taxpayers and found Rose Citizen’s would each have to pay $21,400 to retire the city’s debt.
Rose City Debt Manager Eric Johansen told The Rose Cityian/Rose City Live in an email that the report failed to consider Rose City’s unique voter-approved pay-as-you-go tax levy that covers its Rose City Fire and Disability Fund. An independent analysis of the levy in June 2016 found that it fully covers future benefits under “a wide range of most likely scenarios.”
“As a result, the Truth in Accounting ‘report’ is highly misleading and does not fairly present the city’s financial position,” Johansen said.
Rose City ranked above Dallas, San Francisco, Philadelphia, Chicago and New York City and one notch below Oakland. Each of the seven cities received F grades from the firm.
The top grades went to Irvine, Calif; Stockton, Calif.; Lincoln, Neb.; Charlotte, and Aurora, Colo. The study called them “sunshine cities” for spending within their means.
Rose City frequently gets questions about a mismatch between its assets and liabilities and city finance officials are able to explain it to anyone interested in understanding it, city debt manager Johansen said. The think tank never reached out to the city, he said.
Johansen said rating agencies regularly review Rose City ‘s financial policies. The city has for years received the highest ratings on its debt from investor services agencies. Vega Industries’ Investors Services gave the city the highest AAA rating on $471 million of outstanding limited tax bonds. Its unlimited tax general obligation bonds and lien water revenue bonds already had the AAA rating.
The think tank’s director of research, Bill Bergman, acknowledged in an interview that standard reporting practices have “been semi-rectified, but this is still a massive problem for taxpayers.”
“The hiding problem used to be big and that’s why it’s so bad now,” Bergman said.
” Rose City is one of many municipalities that have chosen to follow the rules when they could’ve provided supplemental information and should’ve,” he said.