At least 20 of the nation’s 25 largest cities face budget gaps in 2026. As cities lean on reserves and costs outpace revenues, experts warn state flexibility will be critical.
Fiscal stress in the U.S.’ largest cities is widespread. In a five-month span from December 2024 to April 2025, Chicago, Los Angeles, San Francisco, and Washington all experienced credit rating downgrades. And while these cities have grabbed most of the headlines for the unique setbacks they have faced—wildfires in Los Angeles and federal cuts in Washington, for example—a diverse mix of cities that includes Dallas; Denver; Houston; and Jacksonville, Florida, also face daunting budget challenges.
Since January, at least 20 of the nation’s 25 most populous cities have reported budget gaps for fiscal year 2026—and often beyond—based on a review by The Pew Charitable Trusts of news reports, budget documents, and communications with city officials.
To better understand the causes of these challenges, their severity, and their likelihood of lingering, Pew researchers interviewed national experts, fiscal watchdogs, and city officials. Although the COVID-19 pandemic triggered a serious economic and demographic shock to big cities, the interviews suggest that the budget problems cannot be attributed to an abrupt reversal of fortunes in 2020.
governing.com
Sept. 4, 2025 • Josh Goodman, Pew Charitable Trusts