When it comes to budget cuts, states are passing the buck to cash-strapped local governments

States passing budget cuts onto local governments

JEFFERSON CITY, Mo. — Confronted with severe revenue shortfalls, some states have found a convenient way of softening painful cutbacks and avoiding statewide tax increases: They’ve passed the buck to their counterparts in cities and counties.

Traditionally, many states help bear the cost of jailing inmates, paving roads, running libraries and providing other services in local areas. Now, states are paring back their payments, leaving local leaders to decide how to make up the difference.

“They’re shafting counties big time,” complained Gene Oakley, the presiding commissioner of Carter County in rural southeast Missouri.

Missouri has reduced its payments to counties for holding prisoners and given local police the responsibility for conducting stings on undercover drinking and smoking. Yet Missouri lawmakers have declined to change a law preventing counties from making their own midyear budget cuts.

Similar cost-shifting is occurring across the nation, from Arizona to Maryland and Michigan to Mississippi. And more is likely to come.

States already have closed more than $174 billion in budget gaps during the 2010 fiscal year, according to the National Conference of State Legislatures. The NCSL says three-fourths of states are projecting shortfalls next year totaling an additional $89 billion, a figure which has been rising.

Local governments face many of the same economic problems as states, including declining sales or property tax revenues. And just as states depend heavily on federal money, many counties rely on state revenues to make their budgets.

In a recent national survey, municipalities blamed reductions in state aid for a third of the more than $56 billion shortfall they face for 2010-2012.

“In effect, we had to do double the cuts we normally would have had to make,” said Chris Bradley, a deputy budget director for Maricopa County, Ariz., the fourth-largest county in the U.S. “We had to cut to cover our own revenue shortfall, then we had to cut to cover for them.”

State aid to Maryland counties has been cut to levels not seen since early 1980s, said Harford County Executive David Craig, president of the Maryland Association of Counties. Some local governments are considering tax hikes on cell phones, utilities and soft drinks to help cover the shortfall in state aid, Craig said.

“The governor was talking about doing more with less. I said, ‘we’re doing less with less,’” Craig said.

In Missouri, some sheriffs are concerned about a cost-saving move to merge the state water patrol into the state highway patrol. Camden County includes the most popular tourist lake in the state but the sheriff’s department doesn’t own a boat. State public safety officials say they don’t plan to stop handling emergencies.

But “any agency that has a lake has got their fingers crossed,” said Camden County Sheriff’s Capt. Gary Bowling. He added: “We’re struggling to keep officers in cars on the roads. There’s no way we could start responding to waterborne emergencies at this point.”

Because they are at the bottom of government flow charts, counties or cities typically cannot pass along the financial woes inherited from states. But some state officials say it’s appropriate for local governments to share the pain.

“When revenues were good from the state, the counties shared in that wealth and they were quick to lobby for additional revenues,” said Missouri Senate President Pro Tem Charlie Shields. “So when times are tough, I probably would say the same thing is going to happen.”

Some states are sharing larger portions of their financial distress than others.

California this year borrowed about $2 billion from local governments’ property tax revenues, which will have to be repaid with interest in three years. It also took redevelopment money and transportation funding from local governments.

Michigan has cut the money it shares with local governments by one-third over the past decade. Local governments have responded by closing parks and fire stations.

Some Minnesota cities already had trimmed back on payroll, children’s library programs and public ice skating parks because of cuts in state aid. That was before Gov. Tim Pawlenty signed a plan in April cutting Minnesota’s projected $1 billion budget deficit by one-third, with the biggest slice coming from aid to cities and counties.

Oakley, the top official in Missouri’s Carter County, said the county may have to consider laying off one of its two sheriffs’ deputies to help offset cuts in state aid.

“I think it’s grossly unfair,” Oakley said. “They need to look for more ways to make government in (the state Capitol) lean before you get out her putting it on the backs of counties.”