(The Center Square) – The majority of U.S. cities were ill-prepared for any financial crisis last year, let alone the one brought about by their respective state shutdowns in response to the COVID-19 pandemic, a new report published by the nonprofit Truth in Accounting (TIA) concludes.

The annual assessment surveys the fiscal health of the 75 largest municipalities in the U.S. based on fiscal year 2019 data. TIA reviewed audited Comprehensive Annual Financial Reports filed by city halls across the country and concluded that even the fiscally healthiest cities are projected to lose millions of dollars in revenue as a result of state shutdowns on top of their previously existing poor fiscal health.

The majority of 62 cities carried varying levels of debt, many of them in the billions of dollars range prior to their states being shut down. The minority of 13 cities had more assets than obligations, a key indicator of long-term financial health.

Total debt among the 75 cities amounted to $333.5 billion at the end of the fiscal year 2019.

Unfunded retirement liabilities are the main contributing factor to the $333.5 billion in city level debt, the report notes. City officials can make their budgets appear to be balanced, TIA notes, by “shortchanging public pension and OPEB (other post-employment benefits) funds” such as health care benefits for retirees. Doing so “has resulted in a $180.1 billion shortfall in pension funds and a $160.1 billion shortfall in OPEB funds.”

“Unfortunately, some elected officials have used portions of the money that is owed to pension and OPEB funds to keep taxes low and pay for politically popular programs,” the report states.

“This is similar to charging earned benefits to a credit card without having the money to pay off the debt. Instead of funding promised benefits now, they have been charged to future taxpayers. Shifting the payment of employee benefits to future taxpayers allows the budget to appear balanced while city debt is increasing.”

New York City had the worst municipal finances in the U.S. for the fifth year in a row. If each taxpayer were to pay all of the bills the city owes, they would each owe $68,200, TIA calculates.

Chicago’s finances are the second worst in the nation, with a taxpayer burden of $41,100 for each taxpayer.

Following New York City and Chicago in the top five with the worst finances were Honolulu, Philadelphia and Nashville.

In New Jersey, Newark and Jersey City were excluded from the analysis because their city governments still do not issue annual financial reports that follow generally accepted accounting principles (GAAP).

The average taxpayer burden across all 75 cities was $7,355.

Irvine, California, reported the best city finances in the U.S. with a $370.3 million surplus.

Following Irvine in the top five were Washington, D.C.; Lincoln, Nebraska; Stockton, California; and Charlotte, North Carolina.

“The bottom line is that the majority of cities went into the pandemic in poor fiscal health and they will most likely come out of it even worse,” Sheila Weinberg, founder and CEO of Truth in Accounting, said in a statement accompanying the report.

The report includes A through F grades assessing each city's financial health and taxpayer burdens or surpluses. Those that received A or B grades were those that had met their balanced budget requirements and had a taxpayer surplus. Those that received C grades indicated that they came close to meeting balanced budget requirements. Those that received D and F grades were governments that had not balanced their budgets and had significant taxpayer burdens.

Based on TIA’s assessment, no cities received A grades; 13 received B’s, 28 received C’s, 28 received D’s, and six cities received failing grades.