As of 2020, Anchorage faced a financial cliff of $658.7 million, leading Truth in Accounting (TIA) to label it a “sinkhole city” because the municipal government did not have enough assets to cover its bills. According to TIA’s analysis, “Anchorage’s financial problems stem mostly from unfunded retirement obligations that have accumulated over the years.”
To fulfill the city’s obligations, each Anchorage taxpayer would be required to pay an additional $6,200. This burden, which was created by elected officials’ decisions, would be each taxpayer’s share of Anchorage’s bills after the city completely drained its available assets. This poor condition led TIA to give Anchorage a ‘D’ grade for fiscal health.
Source: Truth in Accounting
As shown in the table above, Anchorage has only $838 million in assets available to pay bills that total $1.5 billion. One worrying liability for the city is its $915 million in unfunded pension benefits and $20 million in unfunded health care benefits for retirees.
Far from addressing this looming catastrophe, the state recently considered legislation that would revert pensions back to an older system — the one that put the state and Anchorage in their precarious fiscal position in the first place. Anchorage should move forward rather than backward when it comes to designing pension systems and making fiscal decisions.