Effects of the recession will hit home in the coming two years, resulting in cuts in local government services and personnel, said a report released Tuesday by a coalition of local government groups.
The report, titled “Local Governments Cutting Jobs and Services,” contains “the latest survey results from local officials on job losses and service cuts,” conducted by the National League of Cities (NLC), the National Association of Counties (NACo), and the U.S. Conference of Mayors (USCM).
The groups’ research and consequent projections conclude that “local government job losses in the current and next fiscal years will approach 500,000,” with “public safety, public works, public health, social services and parks and recreation hardest hit by the cutbacks.”
“Services to the public have been cut, county employees have been laid off or furloughed and capital expenditures have been reduced,” said NACo President Judge B. Glen Whitley of Texas.
The three organizations are looking to the federal government for local assistance. The report concluded that there is “an urgent need for federal action to minimize layoffs and service cuts in order to help families and stabilize local economies.”
These projections compound the economic struggles at the state level. The National Conference of State Legislatures (NCSL) also released a report on Tuesday, titled “State Budget Update: July 2010 (Preliminary Report).” The NCSL report “provides information on estimated year-end balances, projected budget gaps in FY 2011 and beyond, and FY 2011 tax forecasts.”
NCSL finds that, collectively, state governments face a budget gap of $83.9 billion for FY 2011.
“State lawmakers are going to need extra stamina to push through this next round of budget challenges,” William T. Pound, executive director of NCSL, said in a news release on the NLCS website. “It will be a long march before state revenues return to their pre-recession levels, not to mention other hurdles lawmakers have to clear.”
A recent MarketWatch article stated that the “biggest shortfall” for state governments is the reduction in federal aid. Increased support provided by the federal government in last year’s stimulus package has not yet been extended by Congress.
Federal Aid
Local government organizations, such as the NLC, NACo, and USCM, support federal legislation providing local economic assistance, such as the “Local Jobs for America Act” (H.R. 4812/S. 3500).
The Senate and House versions of the bill, presently in committee, face challenges from fiscally conservative Republicans and Democrats, who seem wary of further increasing federal deficits through stimulus spending.
These reports may also impact forecasts made in the recently-released U.S. Mid-Session Review, a FY 2011 budget prepared by the federal government’s Office of Management and Budget. The review forecasts an unemployment rate of 9 percent for 2011, falling to 6 percent by 2015.
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