(Ed.’s note: This is the first in a two-part series on the employment picture in counties and counties’ efforts to jump start economic development in tough times.)
Some counties across the nation are already feeling real effects from state budget shortfalls and are anticipating drastic measures such as eliminating health insurance for county employees, introducing taxes and even laying off workers.
Forty-three states are expecting a shortfall in annual budgets totaling $85 billion, according to the Center on Budget and Policy Priorities. And although President George W. Bush’s proposed “growth and jobs” plan could send $10 billion over 10 years to help states deal with unemployment, many state and county officials say the plan could add to their growing budget problems by costing them much more than $10 billion in lost revenues from the removal of taxes on stock dividends. Furthermore, counties are trying to deal with the costs of security measures since the September 11 attacks, bioterrorism threats and long-delayed capital improvements.
November was a typical month in the recent economy, with 40,000 jobs trimmed across the country. And while some areas, such as the Washington D.C. metropolitan region and several counties in Southern California have experienced low unemployment and even modest employment gains, the picture is mixed among different industries and counties.
Marion County in southern Illinois is a worst-case scenario. Facing a $1.2 million budget deficit, the county became the first and only county in Illinois to end employee health insurance. Officials said rising insurance costs, falling income-tax levels, and rising payments for housing prisoners outside the county were the causes of the axed insurance benefits. More than 130 employees are affected. County employees have also begun getting laid off.
Marion County Finance Committee Chairman Mike Reed said the county will have to spend about $1 million more in the next budget year on law enforcement than it did four years ago.
“We’re just addressing the ongoing situation,” Reed told the Centralia Sentinel.
Earlier this month, his committee recommended considering a quarter-cent sales tax increase on items such as restaurant food and clothing. The “public safety” tax could begin to relieve the budget, providing as much as $400,000 annually for law enforcement efforts in Marion County, Reed said.
Many large urban counties can also see troubled economic times ahead. Minnesota’s new governor, Tim Pawlenty, has proposed eliminating state and local taxes in economically depressed parts of the state to attract new businesses and industries – a path to creating jobs and spurring economic development that seems to be happening more and more in localities throughout the nation.
But at the same time, Pawlenty must deal with a $4.6 billion state budget shortfall, and forecasted “a crisis the likes of which we have never seen” in the St. Paul Pioneer Press.
“Hennepin County has a more resilient economy than most other parts of the nation. But we’ve been hit in the last two years in the travel industry,” said County Commissioner Randy Johnson, noting that his county is home to both Northwest Airlines and The Carlson Company, owner of Radisson Hotels and Resorts.
Job layoffs and eliminated healthcare for county employees may happen soon.
“Our own workforce has been flat for at least the last year. We’re one of the states facing the biggest deficit. I’m looking at reducing county staffing from 11,000 employees to 10,500, and I’m hoping it’s by attrition,” Johnson said.
“General-assistance medical care could be eliminated, or at least cut back,” he added.
One economic bright spot for the county is its employment-training programs for minorities and immigrants. But despite a recent windfall of $565,000 in county funding, there’s no guarantee such programs not mandated by the federal government will continue.
“It’s a question whether these programs will be reduced, or whether we won’t do them at all,” said Bill Brumfield, director, Hennepin County Training and Employment Assistance Department. “TANF [Temporary Assistance for Needy Families] – that’s mandatory. We’ve got to continue to do it. We’re trying to rank all these things, as to where we can make cuts.”
Brumfield said there has been a slowdown in hiring in the Minneapolis area for a couple of years, but added that the job front has been even worse in the past six months.
“Retail sales haven’t been good. Northwest Airlines laid off 6,000 or 7,000 people. It’s pretty tough. There isn’t a lot of hiring going on,” he said. “When times are bad and budget cuts come, our department is opposite everybody else in the government system. We’ve got a lot of work to do everyday to get people trained and to find them jobs.”
Brumfield’s department has a wide range of duties, including teaching immigrants and refugees English skills, placing people in clerical jobs, supplying voice mail systems for people seeking employment, and providing hazardous-waste training for unemployed workers to be placed in brownfields-cleanup positions, among many other programs.
Perhaps one of the most publicized regions to experience severe job loss is Silicon Valley, the technology corridor in and around San Francisco City/County. Conversely, Southern California counties like San Bernardino, Riverside, Orange and San Diego have low unemployment in the 4 percent to 5.5 percent range, while California’s statewide average is 6.4 percent. But with about 87,000 jobs lost last year, unemployment in the Bay Area has soared to 7 percent and above.
And although the fast-growing counties surrounding it are having success, Los Angeles County, like other urban ones such as Hennepin and San Francisco, is looking at cutbacks that could start as early as this month.
The county could face a loss of $719 million in state funding under Governor Gray Davis’ budget proposal, which could result in layoffs, salary cuts and longer waits for public services, officials recently told the Long Beach Press Telegram. The governor’s proposal to stop paying Los Angeles County for revenues lost by a temporary reduction of vehicle-license fees alone would result in a county loss of $663 million over the next 18 months.
County officials are also anticipating the early release of some prisoners, closing parks and libraries, and delays in county services such as health and welfare.
