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72 Percent of America's Counties Face Budget Shortfalls

Raising taxes, reducing services are options to replace lost revenue.

WASHINGTON, D.C. -- Nearly 72 percent of America's counties are facing budget shortfalls because of funding cuts at the federal and state levels and the struggling economy, according to a survey released Thursday by the National Association of Counties (NACo).

"America's counties are facing difficult decisions," said NACo President Ken Mayfield, a county commissioner of Dallas County, Texas. "With less money coming from federal and state governments, limitations on raising more revenue locally, and efficiencies and costs savings exhausted while the demand for essential services are increasing, there could be serious consequences for millions of Americans in communities across the country."

Forty-five percent of the counties facing shortfalls are considering some form of tax increases, according to the survey. The survey showed that some counties have already raised local taxes and are considering additional increases. More than half of these counties have increased residential property taxes (52 percent), commercial and agricultural property taxes (52 percent) and local option sales taxes (54 percent).

Seventy-three percent are considering increasing special purpose sales taxes, and 61 percent are looking at raising motor vehicle taxes as a way of making up for the lost revenue.

Mayfield outlined a three-point legislative program to help counties. The proposal includes approval of an economic growth package, legislation to require collection of remote sales taxes by Internet and catalog companies, and approval of funding for homeland security.

The 12-question survey was conducted in January 2003 for NACo by the Carl Vinson Institute of Government at the University of Georgia. All 3,066 counties in the country were sent surveys. The results are based on 715 responses that closely reflect the population distribution of counties nationally.

The survey showed that revenue for counties was down in six categories. Fifty-three percent said state revenue was down. Twenty-four percent reported reductions in county sales tax revenue. Fifteen percent reported less revenue from county property taxes and 13 percent less revenue from federal pass-through programs. Just under 29 percent said they were experiencing no revenue shortfalls.

Counties that are experiencing shortfalls have identified a number of areas where decreases in services could occur. Twenty-five percent of the counties are planning decreases in public health services. Highways and street construction services would be reduced by 26 percent of the counties and family and human services would be decreased by 24 percent of the counties.

Other services that would be decreased include: highways and street maintenance (23 percent), healthcare programs (23 percent), sheriff's department (23 percent), infrastructure maintenance (19 percent), parks and recreation (17 percent), arts and culture (14 percent) and public safety (14 percent).

Thirty-seven percent of the counties facing state reductions for mandated programs will reduce services for that mandated program. Other methods to make up the difference for those cuts for mandated programs are to use reserve funds (31 percent), increase county funding (22 percent), use contingency funds (19 percent) and increase taxes (17 percent).

The survey showed that the demand for services continues to rise primarily in the justice and public safety area, information technology and public health. Sixty percent of the counties said there was an increase in demand for jail and correctional institution services; 56 percent for sheriff's activities, 40 percent for courts; 39 for public safety; 33 percent for information technology; and 33 percent for public health.

The National Association of Counties