Philadelphia, Pennsylvania — Philadelphia carries one of the highest tax burdens in the country and remains unable to fully cover its long-term financial obligations, leaving the city roughly $17,000 short per taxpayer, according to a new analysis from Truth in Accounting. The report ranks Philadelphia third nationwide in unfunded bills, behind only Chicago and New York City.
The watchdog group estimates the city’s outstanding bills totaled $20.1 billion in 2024, the most recent year with available data. Despite modest improvement compared with prior years, the report found Philadelphia could cover only slightly more than half of its obligations. Truth in Accounting argues the gap persists because common accounting practices mask the true scale of liabilities, including treating borrowed funds as revenue, deferring payments, and excluding the full cost of employee benefits.
Retiree health care and pension obligations account for a significant share of the problem. In Philadelphia, years of underfunding and dependence on volatile investment returns have produced an estimated $8 billion pension liability. The report warns that addressing the shortfall could eventually require tax increases, service reductions, or both.
Philadelphia’s situation mirrors broader fiscal pressures across Pennsylvania, which Truth in Accounting classifies as a “sinkhole state,” meaning government revenues are insufficient to meet long-term commitments. The imbalance has fueled prolonged partisan disputes over budget priorities and fiscal reforms, with lawmakers divided over whether spending cuts, tax changes, or structural reforms should take precedence. While the city technically balances its annual budget, the report concludes that long-term liabilities continue to pose significant risks to taxpayers and future public services.
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