Are City Fiscal Woes Widespread? Are Pensions the Cause?

Detroit’s bankruptcy and Chicago’s pension problems prompted a wave of speculation about city finances, but these two examples are not representative of U.S. cities at large: the overall fiscal condition of cities is improving, and bankruptcies remain rare.

This issue brief examines a sample of cities with financial problems and explores the extent to which economic factors, poor fiscal management, and/or high pension costs contribute to the challenges such cities face. Key findings include:

• Only a small number of cities overall face serious financial troubles, and one-third of them are in California.
• Pensions are only a minor factor in financially troubled cities; fiscal mismanagement tops the list, followed by underlying economic issues.