Miami, Jacksonville deemed ‘sinkhole cities’ amid grim fiscal outlook

When it comes to financial health, not all Florida cities are created equally.

In fact, two of them are among the worst positioned in the country among 75 cities rated in the new Truth in Accounting Financial State of the Cities report.

Miami and Jacksonville are both called “sinkhole cities,” graded as a “D” on a scale ranging from “A” to “F.”

Miami, at 67th in the country, has a per capita fiscal burden of $13,400 per resident. The city would need $2.3 billion to get out of the hole. Nearly $2.28 billion is obligated to pension and retiree health care costs.

Jacksonville is ranked 60th, in the hole by $3.6 billion, which equates to $9,800 for every citizen. Its pension liability of more than $5.1 billion is a big reason why the city is so cash-strapped.

Another big reason is big spending.

“Governmental activity expenses increased by $433.7 million from fiscal year 2022 to 2023, outpacing the $304.5 million rise in associated revenues. Public safety expenses, which account for 53% of total governmental costs, rose by $418.1 million adding financial strain,” Truth in Accounting noted.

It’s not all bad news though.

Tampa is the fourth-healthiest city in the country in terms of municipal finances, with a $505 million total surplus ($3,400 per taxpayer) helping move it from 12th place the year before.

Property tax collections are up $40 million year over year. That trend, combined with savvy pension planning, explains the jump.

“Tampa’s financial condition improved largely due to a reduction in its pension liability. After facing substantial investment losses in 2022, the city’s pension plans rebounded strongly in 2023. Notably, the Firefighters and Police Officers’ Pension Trust Fund, which experienced a 15.6% loss in 2022, reported a 17.1% investment gain, helping to restore its unfunded pension liability to more typical levels,” Truth in Accounting reported.

Orlando came in at No. 18, meanwhile, with a $300 surplus per taxpayer and a $37.6 million cushion overall.

But there is a caveat in the form of unorthodox pension accounting that makes the number less than reliable.

“The city’s finances appeared to improve as of September 30, 2023, largely due to a reduction in its net pension liability. However, this liability was measured as of September 30, 2022, when the market value of pension investments was higher. Cities with pension data available for 2023 have found that market fluctuations negatively impacted pension investments, increasing unfunded pension obligations, and it is likely the same will occur with Orlando.”

Both Orlando and Tampa received “B” grades in this year’s report.