Despite local governments' continued struggles with revenue shortfalls, the overwhelming majority of counties are not raising sales and property tax and instead are opting to reduce personnel costs and dip into savings.
The findings are based on a survey of 500 counties last month by the National Association of Counties. (View the full survey here) While most local governments have been hit with declining revenue in light of the economic turn down, they aren't turning to traditional revenue-generating tools. Just 15 percent of the responding counties had increased their property tax rates in light of the struggles, and only 2 percent increased sales tax rates. That's partially because nearly 60 percent of counties said states impose a cap on the property tax rates. But Jacqueline Byers, NACo's research director, told Governing that many counties haven't reached that cap. Instead, they either lack the political will to raise taxes or believe that, given the poor state of the economy, doing so would be a burden on residents. Instead, counties are largely addressing revenue shortfalls by trying to reduce personnel costs. More than half the counties have instituted furloughs. Salary freezes, hiring freezes and restrictions on employee travel are also common. Fifty-three percent of respondents have fewer staff today than they did in the 2010 fiscal year. Below: Steps counties are taking to address revenue short falls. Article continues after the graphic. How Counties Handle Revenue Shortfalls Powered by Tableau “After multiple tough budget cycles, counties appear to be settling into the ‘new normal’ of revenue and staffing levels,” said NACo President Glen Whitley in a statement. “However, the budget cuts have become increasingly more severe and are affecting more Americans. Counties are not out of the woods. "Additional state aid cuts are looming, increased energy and operating costs are nearly certain, and increasing demands for public services remain.” About 46 percent of counties attributed their revenue woes to declines in state funding, the leading cause they cited. Those numbers may increase, since state legislature throughout the country are currently convening. The survey also noted that 20 percent of counties said they are cutting back on services offered. Byers said that's been happening for about two years, but now, counties are instituting more severe cutbacks -- think reduced garbage pickup instead of shorter library hours. But Byers said the survey does have some good news: Counties are coping with the revenue shortfalls. Only 17 percent of the counties had suffered shortfalls after adopting their budgets, suggesting they are finding areas where they can afford make cutbacks.