"As three-term Mayor Joyce Craig prepares to leave office later this year — possibly to run for governor — she’s leaving behind $276 million in debt, a hole in city budgeting most taxpayers know nothing about.

That is the finding of the nonprofit Truth in Accounting project, which analyzes government budgets and reveals what the public books would show if industry practices were followed.

The Illinois-based 501(c)3 recently looked at the financial reports for New Hampshire’s two biggest cities, Manchester and Nashua, and found both laden with debt that isn’t always disclosed to residents. That type of debt and tax hiding is hurting taxpayers and harming communities, said Sheila Weinberg, co-founder and president of Truth in Accounting.

“We really believe that our representative forms of government are being harmed because citizens are making decisions on tax policy, spending policy, and who they even vote for based on misleading or wrong financial information,” Weinberg said.

On a grading scale of A through F, Manchester and Nashua got D’s from Truth in Accounting, partly due to the lack of transparency.

Looking at the 2021 audited financial reports for each city, Weinberg found Manchester taxpayers face $276 million in debt, while Nashua residents have $272 million thanks to practices like inflated revenue projections, understating the true cost of government functions, and counting borrowed money as income.

In Manchester, clearing out that debt would cost $5,800 per resident. According to the report, it would cost $7,300 for each Nashua resident.

The biggest accounting problem Weinberg found is how the two cities report retirement and healthcare benefits for city employees. In Manchester, the city only recently started including total employee compensation costs in financial reports. Before that, the city would not report how much taxpayers would be paying to fund the pensions and healthcare of employees once they retire.

“That is going to have to be paid by future taxpayers. So these employees are gonna retire, these employees are not gonna be working for future taxpayers, right,” Weinberg said. “But those taxpayers will be responsible for paying for their healthcare when they retire.”

Manchester taxpayers are shouldering a $267.5 million bill for unfunded pension obligations and $54.3 million in unfunded “other post-employment benefits,” or OPEB. Nashua’s split is $221.9 million in unfunded pension obligations and $76.4 million in unfunded OPEB benefits.

Manchester Mayor Joyce Craig announced she is leaving office after years at the helm, letting the next mayor deal with the more than $300 million in unfunded taxpayer obligations.

Jay Ruais, the Republican candidate for mayor, called the report a wakeup call on the need for a fiscally-responsible chief officer in the Queen City.

“A mayor has a responsibility to be a steward of the taxpayer’s dollar and to manage the city’s finances responsibly,” Ruais said. “Our city cannot reach its full potential if we treat taxpayers like a piggy bank and fail to properly plan and prioritize our budgeting, both now and in the future. Using one-time funds for long-term projects, the routine increase in taxes and spending, and the inability to make difficult choices put the city on a dangerous fiscal path.”

Neither Ward 2 Alderman Will Stewart nor At-Large Alderman June Trisciani, both Democrats running to replace Craig, responded to a request for comment.

According to Weinberg, elected politicians tend to spend money that should be going to pensions and OPEB obligations to keep taxes low and fund more popular government programs. This cost-shifting just pushes the bill onto future taxpayers, while politicians appear to be balancing their budgets while keeping taxes low and funding services, she said.

Truth in Accounting’s mission is to show taxpayers the real cost of their government.

“We have worked for years to recast government’s financial reports to show a truer picture of their financial condition, bringing business accounting to these financial statements instead of the political math that is used by the governments,” she said.