For years, I’ve been saying that North American cities are broke. That they owe more than they bring in… that they are functionally insolvent. Some have dismissed this as hyperbole or advocacy rhetoric. But it’s not. It’s the truth. And now, for the first time, we have the data to prove it — and it’s even worse than we thought.
Over the past 18 months, with the generous support of a key donor, we’ve been developing a tool that will change how we talk about local government budgets.
We’re tentatively calling it the Strong Towns Fiscal Health Assessment.
Most local decision-makers — mayors, council members, city staff — are not accountants. They step into public service to make their communities better, not to become financial analysts. Yet, even though they lack formal training in finance, they are still responsible for making critical financial decisions that shape the future of their communities.
But financial stress doesn’t announce itself with flashing lights. It creeps in over decades, accumulating as past decisions shape present realities. Cities struggle not because of one bad choice, but because of structural issues that go unexamined until they become unmanageable.
The Fiscal Health Assessment translates complex financial realities into clear insights. By applying three key financial indicators — sustainability, flexibility, and vulnerability — this tool helps cities understand their long-term financial health. It reveals structural challenges and highlights where policy changes are needed, allowing cities to get ahead of financial crises instead of reacting to them too late.
We’ve already analyzed the financial reports of three dozen cities, and the results are alarming. Every single one of them — without exception — is drowning in liabilities. Nearly all are on a dangerous, downward trajectory. We’ve been saying for years that our development pattern has rendered cities insolvent; now, their own financial data is proving the point.
Take Kansas City, Missouri, as an example. Here’s how their Net Financial Position — the difference between financial assets (cash, receivables) and liabilities (debt, obligations) — has changed over time. (Note: Down is bad.):
Kansas City’s financial outlook highlights a growing problem. The city’s current assets have not kept pace with its liabilities, meaning future revenue must be used to pay for past expenses. Right now, Kansas City has already obligated itself to raise taxes or cut services in the future by a total of $3.7 billion — just to cover what’s already been spent.
That’s 150% of their current annual budget, locked in for future tax hikes or service reductions.
And Kansas City isn’t even the worst case we’ve seen. Not even close.
We’re rolling out the Fiscal Health Assessment this April, aligning with tax season, to ensure that cities have a way to make sense of their own budgets. But there is more work to be done.
This is where you come in.
We are asking our Strong Town readers to share this with their local officials and encourage them to request a Fiscal Health Assessment for their community. We want every elected official to ask their staff for their data presented in this way. We want every municipal financial officer to make this a routine part of their reporting. And we want every citizen to expect to see this assessment as part of their annual budget conversation.
If your city wants to work with us to analyze its financial position, let’s talk.
We’re also looking to expand this project, including refining the messaging around it. If you or someone you know would be interested in helping us bring this work to more communities, let’s talk…