The word from across the country is grim. Counties, like states, are slashing budgets. “The fiscal strength of the 1990s has been replaced by economic uncertainty,” said Larry Naake, NACo executive director, after reviewing information on county finances provided by about 30 counties.
From Oregon to Kansas to New York, state deficits are taking a direct toll on America’s counties. The problems seem to be greatest on the two coasts where states like New York and California are facing fiscal crises not seen since the Great Depression.
Officials in Orange County, Calif., estimate they will need to cut 8 percent of their current budget to offset the loss of funds prompted by California’s deepening budget deficit. The cuts will be made across-the-board and will affect law enforcement, social and health programs. Losses to the county include $20 million in revenues for state-mandated programs, for which the state will not reimburse the county, and $3.5 million in federal penalties because the state failed to develop an automated child support collection system.
In Plumas County, Calif., the situation is not much better. Leaders there anticipate a 10 percent reduction in state assistance. The county may have to reduce services and finance other services from their dwindling general fund. An $18 million capitalization program for replacement of the courthouse annex, animal shelter and permit center compounds the problems of the county.
Oregon
In neighboring Oregon, Tillamook County officials reported state funding cuts will cause their schools and community college funds to be slashed, that the local fish hatchery will be closed, and the local circuit court will close on Fridays and stop hearing misdemeanors and civil claims. The county also reported that 23 persons receiving vocational services and eight “independent-living” clients would lose access to services.
Washington
In Walla Walla County, Wash., state efforts to “backfill” funds that were lost due to voter initiatives to reduce county property taxes will come to a grinding halt because of a huge state deficit. The impact will be felt most directly in the health department where 24 programs are partially funded by state funds. Already the county has reduced staff in the health department, and that means longer lines for services and less outreach efforts.
Thurston County is also facing deep cuts. County officials expect 15 percent of their health and social services’ budget, or $653,000, to be cut by the state. In response, the county is considering eliminating programs that do not correspond to its health and social services’ priorities.
Pennsylvania
Nearly 2,500 miles away in Butler County, Pa., the situation appears no better. The county reports that the Commonwealth of Pennsylvania has not met its obligation to fund the adult probation program. The increased caseload has forced the county to hire more staff; however, contributions from the commonwealth are no higher than they were 10 years ago. The county will either have to cut back on a wide range of services primarily funded by the commonwealth or increase taxes. Among the programs likely to be cut are mental health and mental retardation, drug and alcohol, and juvenile probation.
Adams County is likely to experience substantial cuts in state funding for environmental programs, farmland preservation, mental health, child welfare and nursing home health care. While the county has not reduced services or cut any programs, many of its programs are under-funded and the general obligations budget is also under-funded because of the commonwealth’s fiscal crisis. Adams County plans to increase local property taxes to make up for some of the lost revenues from the commonwealth.
New York
New York City is not immune from the crisis either. Faced with a $4 billion Medicaid program and a $3.2 billion budget deficit, Mayor Michael Bloomberg is looking for substantial assistance from the state. The problem is that New York State is facing its own budget shortfall and is not likely to be able to address New York City’s budget crisis without increasing taxes or receiving additional aid from the federal government.
Suffolk County Executive Robert Gaffney indicated that Medicaid obligations are also hitting his county very hard. He said, “All of the counties in New York State have the same kinds of problems, and they basically surround Medicaid.”
The South
The Mississippi Association of Supervisors reported that counties are already making up substantial revenue shortfalls from the state or cutting services. Last year the state cut its homestead property tax exemption reimbursement to counties by $10 million and this year the cut is likely to remain in effect. The association indicated that counties are cutting programs, reducing services across-the-board and increasing property taxes.
In Fulton County, Ga., 25 percent of the county’s budget has been affected. The county receives $6 million per year from the state to pay for Medicaid, substance abuse and programs for people with developmental disabilities. The county has “re-engineered” some of the programs under these broad categories to ensure their continuation or eliminated them entirely if no funding is available from the state.
Escaping fiscal crisis
There are exceptions to these fiscal crises. New Castle and Kent counties in Delaware are among the few counties that reported no major adjustments in their expenditures or services. Officials worry, however, that the Delaware legislature will stop sharing a 2 percent real estate transfer tax. If that happens, New Castle and Kent counties will need to consider decreasing services and increasing user fees.
In South Dakota, the message is the same. The only money counties receive from the state is a small grant for county roads, and these funds are earmarked from the vehicle license fees.
Utah counties also report that they should be able to sustain their public services during that state’s budget crisis. The counties indicated that they have not been reliant upon the state to provide services and that their self-reliance should prevent future problems.
Lemhi County, Idaho has seen no impact from the state’s deficit. But Idaho is experiencing a massive state deficit, and the county fears some fallout from the state’s crisis. The county is dependent upon a percentage of the state sales tax for its operations, and any change in the allocation of those revenues may have a major impact on the county.
Midwest
Even the heartland is not immune to these fiscal problems. Dane County, Wis., lost $4 million in state revenues last year and anticipates losing $20 million this year. To minimize the impact, Dane County has kept 91 vacant positions open and is trying to reduce costs by increasing efficiency. But the county already depends on private donations to operate one of its libraries and did have to raise taxes and will raise user fees.
Minnesota’s Olmsted County indicated that the local share of costs for social services has risen dramatically, and nearly all of its major county programs are dependent on state funding. County officials expect to see state funding cuts for public health, social services, corrections, and roads and bridges. The effect of these cuts would include reduced services and increased service fees.
Johnson County, Kan., indicated the county will cut its budget by $11.2 million this year to make up for the shortfall in state funds. This includes cutting personnel costs by $1.5 million, reducing contracts by nearly $1 million, foregoing $2 million in county improvements and $1.2 million in road construction.
Sedgwick County, Kan., estimates it will need to lay off five deputy sheriffs. These layoffs will result in less court security and fewer road patrols. Leaders also estimate that three employees from the county’s public works department, two employees in their county maintenance department and one employee in their emergency communications department, as well as about 10 other employees, will have to be terminated. The result will be a substantial reduction of services at a time when demand is increasing.
Lake County, Ill., officials said their transportation budget has been hit very hard by state cuts, as have the health department’s homeland security and West Nile virus programs. To meet the budget crisis, the county stopped new hires, reduced its employment and training budget, and reduced the size and scope of transportation programs. They anticipate a decrease in services. But if the budget gets too tight they may have to consider property tax increases.
Mountain West and beyond
The situation in Montana is also dire. McCone County reports that the state is proposing to cut Medicaid prescription drug reimbursements and eliminating the state CHIPS (children’s health insurance) program. In addition, the county believes it will have to close its county health services department. However, the county has already raised its property tax by 15 percent, and with no other revenue source, cuts in law enforcement and other public safety operations may be necessary.
And in Alaska, where oil revenues help substantially with local and state funds, the state has reduced its reimbursements to local governments. Ketchikan Borough has received less than 50 percent of what it is entitled to for state reimbursements and this has caused the borough to reduce services while increasing fees. The economy of the borough, however, is so bad, that the borough cannot consider raising property taxes.
(The University of Georgia, under contract with NACo, is conducting an extensive review of the fiscal crisis in America’s counties.. The results are expected to be released in early March.)
