Most U.S. counties are having to cut back on spending on safety and infrastructure in the face of monstrous revenue shortfalls, the National Association of Counties said on Friday.
Counties are freezing pay, delaying infrastructure repairs and resorting to layoffs and furloughs due to the cash crunch, the association found in a survey of 800 counties.
Counties large and small are experiencing their worst budget and revenue crisis since the early 1990s, said National Association of Counties Executive Director Larry Naake in a statement.
An economic recession that began in 2007 continues to whittle away at county revenues, with more than half of those surveyed saying a drop in sales tax receipts contributed to their current budget shortfalls.
Analysts, economists and politicians are keeping an eye on the financial conditions of state and local governments for fear their budget crises could swell unemployment and help push the U.S. economy into a double dip recession.
The counties' crises also pose a more general risk that those who depend on local government for services such as healthcare could soon find themselves out in the cold.
There are more than 3,000 counties in the United States and they provide a large portion of the country's road repairs, public safety personnel, and hospital care.
A majority of the counties the association surveyed said they began their latest fiscal year with shortfalls of at least $100,000. The largest shortage was $50 million and 1 percent of those surveyed say they have projected gaps between $200 million and $250 million.
Counties are also smarting from reductions in state and federal funding, and nearly half of the counties are suffering from a decline in property tax revenue.
County staffing reductions are hitting sheriffs, police and fire and rescue, with more than a third of the counties the association surveyed last month saying they had furloughed or laid off some of those workers.
More than a fourth of counties had cut staffing for jails and 25 percent had cut health workers. Few counties plan on picking up hiring in the next year, according to the survey, which will do little to bring the country's unemployment rate back below 9 percent. The U.S. unemployment rate is currently 9.5 percent and it has been above 9 percent for 14 straight months.
Oakland County, Michigan, has had to confront job losses and declining real estate values, which will impact the AAA-rated county's tax base well into the future, County Executive Brooks Patterson said on Wednesday.
To say that Michigan and Oakland County have faced some serious hurdles these past few years would be a gross understatement, Patterson said in a budget address, noting that the county depends on revenue from the state and U.S. government along with property taxes.
Michigan, one of the worst hit states by the economic recession, has little to share, he said. Oakland is not alone in needing a hand from the federal government.
The $863 billion economic stimulus plan passed in February 2009 funneled millions to local governments for police, education, healthcare and road repair through the states. But most of that money runs out in December -- states and territories have already received more than 60 percent of the funds designated for them in the plan, according to the stimulus oversight board -- and they already feel the pinch.
In June, Moody's Investors Service revised the outlook for the wealthiest county in the United States, New York's Nassau County, to negative from stable partly because of the expiration of the federal stimulus plan.
NACo noted 18 percent of counties surveyed have yet to receive any stimulus funds .
(Reporting by Lisa Lambert; Editing by Andrew Hay)