WASHINGTON -- More than a third of all large U.S. countries face budget shortfalls this year, and most of those affected have decided to delya capital projects or cut spending, the National Association of Counties said yesterday.
Budget problems are expected to hit 173 counties, or 39.1% of the 443 counties with populations over 100,000, the association said in its first-ever survey of the fiscal problems of large counties.
Kaye Braaten, president of the organization, told reporters that the figures show "a financial crisis facing county government in our country." Ms. Braaten, who is a commissioner from Richland County, N.D., added the shortfalls are being caused by decreasing federal aid, dwindling options for raising revenue, and the recession.
When asked, however, Larry E. Naake, the association's executive director, acknowledged that there was no way of knowing whether the 39.1% number represents an increase or decrease because his group has never surveyed the counties on this issue before.
His own impression, he said, is that the strain on large counties has grown over the last few years and will keep on growing.
The survey found the average budget shortfall reported was $8.3 million. Philadelphia County, Pa., reported the largest deficit, at $219 million, while Merrimack County, N.H., reported the smallest, at $30,000.
While those figures pale in comparison with the $200 billion-plus federal budget deficit, the association noted that most counties are saddled with balanced-budget requirements -- something the federal government does not have to worry about.
One finding likely to catch the attention of the tax-exempt bond community is that 87 of the counties reporting shortfalls, or 55%, said they would cope by delaying capital projects, which are often financed with municipal bonds. Another 38% of the troubled counties said their first budget-balancing move would be to lay off workers. Most said they would avoid cuts in services as much as possible.
About half of the strapped counties said they would balance their budgets through a mixture of spending cuts and revenue increases. Only a third of that group plan to raise taxes, while another 43% said they would increase user fees and charges.
The survey also found that certain states were particularly hard hit by fiscal problems. In California, 74% of large counties reported budget shortfalls; in Maryland, 73%; New York, 73%; and in Virginia, 61%.
With this survey completed, the associated will now turn uts attention to rural counties -- those with populations under 100,000 -- and examine their financial situations over the next six months, Mr. Naake said.