NACo Publications on County Economic Status

According to the National Association of Counties, the nation’s midsize and smaller counties are experiencing the full effects of the down economy and are struggling to cope with declining revenues. The latest survey results published by NACo can be accessed here The survey includes responses from three Tennessee Counties: Campbell, Gibson and Scott.

Nearly half of the responding counties, 47 percent, said that their anticipated budget shortfall was worse than expected and 4 out of 5 respondents (82 percent) said the shortfalls will continue into their next fiscal year. Further, the survey showed that counties are taking any and all actions to cope with sharply declining revenues – from travel restrictions and delaying purchases to more drastic actions such as cutting services, increasing taxes, furloughs and layoffs.

One hundred thirty eight counties from 34 states responded to the survey in late October sent randomly to 1,500 counties across the country. The sample group was made up primarily of midsize to smaller counties by population. The survey showed how counties are taking an “all of the above” approach to address shrinking revenues and continue to provide essential public services. For example, less severe budget actions counties are taking include:

• delaying purchases or repairs (60 percent of responding counties);
• delaying capital investments (54 percent);
• use of rainy day/reserve funds (44 percent);
• travel restrictions (41 percent); and

However, a significant number of responding counties said they are taking more severe actions to cope with declining revenues, including:

• salary and/or pay freezes (59 percent);
• hiring freezes (49 percent);
• increasing property taxes (15 percent).
• layoffs (26 percent); and
• furloughs (12 percent).

Other actions include renegotiating labor contracts (13 percent), increasing the local option sales tax rate (2 percent), reorganizing county fleets (13 percent) and implementing four-day work weeks (7 percent).

The NACo survey also aimed to determine how counties are being affected by the $787 billion American Recovery and Reinvestment Act which was signed into law by President Obama in February. About two-thirds of the responding counties (61 percent) said they expect to receive funding as a result of the Recovery Act. However, most counties said they have received less than half of the expected funds so far. The majority of anticipated funds are through the new Energy Efficiency and Conservation Block Grant program, the Community Development Block Grant Program, and various transportation programs.

America’s metropolitan counties are suffering with declining revenues as well. An October 2008 NACo survey of larger counties (more than 100,000 residents) found that two-thirds of those responding counties anticipated a shortfall this fiscal year resulting in budget fix remedies such as salary and hiring freezes, service cutbacks, furloughs and layoffs. (See survey links below)

Related resources:
A previous report on this topic from a June 2009 survey is available here and another report from October 2008 is available here.

Additionally, NACo also has available a report from June 2008 on foreclosures and their impact on counties here.