In a comprehensive analysis conducted by Truth in Accounting (TIA), the City of Santa Ana’s financial landscape has been revealed to be in dire straits, with the city facing a significant deficit. TIA’s assessment indicates that Santa Ana currently owes more than it owns, and the city’s Taxpayer Burden is a staggering -$5,600, garnering a concerning “D” rating from the financial watchdog.
A PDF copy of the Analysis can be downloaded here.
The Taxpayer Burden™, a metric encompassing all assets and liabilities, including retirement obligations, paints a bleak picture for Santa Ana. With only $458.9 million in assets available to offset bills totaling $1 billion, the city finds itself in a considerable financial hole of -$565.7 million. To bridge this deficit, each Santa Ana taxpayer would need to contribute $5,600 to the city.
Digging deeper into the numbers, Santa Ana’s reported net position is inflated by $87.9 million, primarily due to the city deferring the recognition of losses incurred when retirement liabilities increase. This practice raises concerns about the accuracy of the city’s financial reporting.
The alarming revelation positions Santa Ana as essentially a Sinkhole City, lacking sufficient assets to cover its mounting debt. The taxpayer burden has nearly doubled since 2016, pointing to an escalating financial crisis that could have severe consequences for the city.
Compounding the issue is the projection that, as more public workers, including police officers and firefighters, retire, Santa Ana’s debt is expected to grow exponentially. The city’s financial predicament is exacerbated by a reluctance from the City Council and Planning Commission to embrace new businesses and development projects, hindering the potential for expanding the tax base.
The crucial question now looms: How will this financial conundrum be resolved? If Santa Ana fails to extricate itself from this self-created financial hole, the specter of the largest municipal bankruptcy in Orange County’s history becomes a looming possibility, casting a shadow over the city’s economic future.
