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Muni Losses

Muni Losses

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Published by: zerohedge on Jul 27, 2010
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Unemployment in America is a national crisis. It is also a local crisis. As individu-als and amilies struggle to fnd work, make ends meet, and keep their homes amidan anemic economic recovery, they increasingly turn to local services or support.Local governments provide job training and assistance, transportation, support ser-vices or individuals and amilies in need,health care and education and aterschoolprograms that support working amilies. Inmany communities, local governments arealso one o the primary employers.Unortunately, just as amilies are increasingly turning to local governments or sup-port, local governments are acing their own fscal crisis. The eects o the GreatRecession on local budgets will be elt most deeply rom 2010 to 2012.
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In response,local governments are cutting services and personnel. This report rom the NationalLeague o Cities (NLC), National Association o Counties (NACo), and the U.S.Conerence o Mayors (USCM) reveals that local government job losses in the cur-rent and next fscal years will approach 500,000, with public saety, public works,public health, social services and parks and recreation hardest hit by the cutbacks.Local governments are being orced to make signifcant cuts that will eliminate jobs,curtail essential services, and increase the number o people in needThis report presents the latest survey results rom local ofcials on job losses and servicecuts. The survey results point to the urgent need or ederal action to minimize layosand service cuts in order to help amilies and stabilize local economies.
THE ECONOMIC ROLE OF LOCAL GOVERNMENTS
Local governments — cities and counties — are important to the vitality o ami-lies and local economies. They provide goods and services that are important to thequality o lie o amilies, such as public saety, parks, libraries, housing and healthservices, and are central to the perormance o local economies.Local budget crises lead to job losses in both the public and private sectors. The busi-ness o local governments is oten conducted through the private sector — construc-tion and maintenance, garbage collection and recycling and tree trimming are just aew examples. The Economic Policy Institute estimates that or every 100 public sec-tor layos there are 30 private sector layos.
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Local government investment in trans-portation, water, sewer and communications inrastructure also leverages signifcantprivate sector growth by reducing private sector costs and creating opportunities or
LOCAL GOVERNMENTSCuTTING JOS AN SERVICES
 Job losses projected to approach 500,000
Rh Brf
Local government job losses in the current andnext fscal years will approach 500,000“Mayors are holding the nation together bymaking impossible decisions every day, andwe have made cuts to the point where onlybone is let. We know rom experience that investment in metropolitan economies withdirect unding to cities and counties can createand save jobs and do it quickly.”Elizabeth B. Kautz, USCM President, Mayor oBurnsville, Minnesota
 Jly 2010
“City cutbacks aect city employees, servicesto the community, and local economies.Every city employee lost means one moreperson in the community without work. Ourcommunities suer rom lost services, whetherit’s less police on the streets or the closing oa local library. Cities are also the backbone otheir regional economies, where investments ininrastructure and services provide a platormor private sector investment and growth.”Ron Loveridge, NLC President, Mayor oRiverside, Caliornia
 
1 Hoene, Christopher W.,
City Budget Shortfalls and Responses: 2010-2012 
,National League o Cities, December 2009, http://www.nlc.org/ASSETS/0149CE492F8C49D095160195306B6E08/BuddgetShortFalls_FINAL.pd.2 Pollack, Ethan,
Local Government Job Losses 
Hurt Entire Economy, Economic PolicyInstitute, May 2010, http://www.epi.org/page/-/pd/issuebrie279.pd
 
LocaL GoveRnments cuttinG JoBs and seRvices
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additional investment. Local governments are also signifcant sources o employ-ment. Local and state governments comprise one o the nation’s largest employ-ment industries, larger than the manuacturing and construction industries com-bined. Local governments account or seven in every 10 o these employees.
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 Local governments across the country are now acing the combined impact o decreased tax revenues, a allo in state and ederal aid and increased demandor social services. Over the next two years, local tax bases will likely suer romdepressed property values, hard-hit household incomes and declining consumerspending.
4
Further, reported state budget shortalls or 2010 to 2012 exceeding$400 billion will pose a signifcant threat to unding or local government pro-grams.
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In this current climate o fscal distress, local governments are orced toeliminate both jobs and services.
CuTS IN LOCAL JOS
In May and June o 2010 NLC, NACo and USCM conducted a survey o cit-ies and counties across the country or the purpose o gauging the extent o joblosses. The survey was emailed and axed to all cities over 25,000 in populationand to all counties over 100,000 in population. The survey results presentedbelow are based on 270 responses, 214 responses rom cities and 56 responsesrom counties.The surveyed local governments report cutting 8.6 percent o total ull-timeequivalent (FTE) positions over the previous fscal year to the next fscal year(roughly 2009-2011). I applied to total local government employment nation- wide, an 8.6 percent cut in the workorce would mean that 481,000 local gov-ernment workers were, or will be, laid o over the two-year period.
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Projectedcuts or the next fscal year will likely increase as many o the nation’s localgovernments drat new budgets, delib-erate about how to balance shortallsand adopt new budgets.
7
Local job losses are most heavily elt in public saety, public works, public health,social services, and parks and recreation (see Table 1). Local governments typi-cally seek to shield direct services to residents rom cuts during economic down-turns and the cuts occurring in these services are indicative o the depth o therecession’s impact on cities and counties.Cities and counties almost always seek to protect public saety services — police,fre, and emergency — rom cuts in personnel and unding. The need or thesebasic, or “core,” services in terms o protecting the public against crime, fre, anddisaster oten increase during periods o economic downturn. The depth o thecurrent downturn, however, means that surprising numbers o cities (63%) andcounties (39%) report cuts in public saety personnel. For some communitiesthis means fre and police stations that are closed and the potential or reducedcapacity to respond to emergencies. A majority o the surveyed cities (60%) and counties (68%) report making per-sonnel cuts in public works. Public works services are highly visible to local resi-dents — such as highway and road construction and maintenance and solid waste(garbage and recycling) disposal. Cuts in public works are common responses toeconomic downturns, but the range o local governments making these cuts in
Survey results project that 481,000 jobs willbe lost in local government services.
3 U.S. Bureau o Labor Statistics, www.bls.gov.4 Local fscal conditions typically lag economic conditions, in much the same waythat state fscal conditions lag economic conditions and the unemployment ratelags overall economic recovery. For local budgets, this lag can be anywhere romone to three years, depending on the actors driving the changes in the economyand the depth o those changes. Current economic indicators suggest that the U.S.economy passed the low point o the current recession in late 2009, which meansthat the low point or local fscal conditions will likely be experienced sometimein 2011. To illustrate this lag, the U.S. Census o Governments reports that localproperty tax collections began to decline in the frst quarter o 2010, two-and-a-halyears ater the housing market began to decline in the summer o 2007. For moreinormation about the lag, see
City Fiscal Conditions in 2009 
(NLC, Sept. 2009)at http://www.nlc.org/ASSETS/E1BD3CEFA8094BD097A04BD10CBB785B/ CityFiscalConditions_09%20(2).pd.5 McNichol, Elizabeth, Phil Oli and Nicholas Johnson,
Recession Continues to Batter State Budgets; State Responses Could Slow Recovery,
Center onBudget and Policy Priorities, July 2010, http://www.cbpp.org/cms/index.cm?a=view&id=711.6 Total city and county employment statistics are drawn rom the U.S. Censuso Governments.7 Not all cities and counties utilize the same fscal year timerames. The most common local government fscal year runs rom July 1 to June 30, which is usedby 46 percent o the surveyed cities and 56 percent o the surveyed counties.Some local governments utilize a January 1 to December 31 fscal year (28percent cities; 21 percent counties), some use a October 1 to September30 fscal year (22 percent cities; 18 percent counties) and others use somealternate timerame (4 percent cities; 1 percent counties).
“U.S. cities will be orced to make gut-wrenching decisions to cut their spending inthe next year. This is a story not just…o NewJersey. You’re seeing it in Sacramento. You’reseeing it happen in Albany and you’re seeing it happen all over the U.S.”Cory Booker, Mayor, Newark, N.J.
Bloomberg BusinessWeek,
July 09, 2010
 
 JoB Losses pRoJected to appRoac 500,000
3
Table 1: % of Localities Reporting Personnel Cts, by Service Area
ServiceCitiesConties
crna25%edl27%25%Lbrr25%36%prkRr54%45%pbllhna48%pblsfy63%39%pblWrk*60%68%sl sr26%52%
*Includes transportation inrastructure, construction and maintenance, zoning, solid waste collection and disposal, and water and sewers.
response to the current downturn is considerably higher than previously. Forinstance, in response to the 2001 recession, a survey conducted by NACo revealedthat 26 percent o counties were delaying highway and road construction and 23percent reported delaying highway and road maintenance.
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 Cuts in public worksgo beyond public jobs, with many o these services provided via contracts withprivate sector businesses. Approximately hal o the surveyed counties report personnel cuts in socialservices (52%) and public health (48%), services that are critical to local res-idents in need. Counties, and some cities, deliver signifcant services in thesearenas, in many cases as extensions o state government programs. For exam-ple, many counties are the primary delivery agents or child welare services,cash assistance payments to individuals and amilies in need and public healthand medical services. Conronted with their own signifcant budget shortalls,many states are cutting these programs. Yet, demand or these services tendsto increase during periods o economic downturn. Personnel and other budgetcuts will increase the already expanding pressures on case loads and the remain-ing personnel.Park maintenance and programs or youth, such as aterschool educational andrecreational activities, and seniors, such as meal delivery services, are also highly visible local services that oten serve as the primary point o interaction or many residents with local governments. Approximately hal o cities (54%) and coun-ties (45%) report personnel cuts in parks and recreation services.Many local governments are also making personnel cuts in library services,resulting in closures, reduced hours and cuts in programs. Libraries oten serve ascenters or job searches or residents without access to computers and the Inter-net, or provide aterschool programs.City- and county-run schools and school districts are also acing signifcant cut-backs. Economic conditions have eroded local revenue bases and, particularly ineducation, state budget shortalls are resulting in signifcant cuts to unding orlocal schools. In response, teaching jobs and special programs are being elimi-
8 Hayes, Harry and Richard Clark, Counties in Crisis, Carl Vinson Institute oGovernment, University o Georgia, July 2003.
“I City Hall does not have a strong fnancialposition, i our oundation is upside downfnancially, we are a hindrance and a burden toother job creators, namely the private sector. Ashley Swearengin, Mayor, Fresno, Cali.
Fresno Bee,
July 19, 2010.

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