The fiscal picture for states and localities is clearly weaker following September 11: Not only did the attacks deliver a staggering blow to already-faltering revenues, they also increased demands for spending for public safety.

Many cities and counties--more than half of cities with populations over 100,000, according to a National League of Cities survey--have had to bolster their defenses with additional outlays. Los Angeles, for instance, has spent $2.3 million on police and fire overtime. The city council has approved $3.4 million to erect barricades around buildings in its civic center, put new metal detectors and surveillance systems in city buildings, improve airport security and create a new fire department hazardous-materials crew. In addition, the city now conducts 600 tests of the water supply daily--a 50 percent increase over the pre-September 11 norm.

Portland, Maine, estimates it will spend an additional $1.8 million a year on security for its airport and seaport. Fort Lauderdale's Port Everglades plans to spend $23 million to construct security gates and walls and to install an extensive surveillance system.

All totaled, the U.S. Conference of Mayors estimates that next year's additional security costs for cities could top $1.5 billion. A portion of the additional policing costs could be defrayed by federal payouts from a fund created by the U.S. Congress' antiterrorism legislation.

It isn't just localities that are affected. In Maryland, state officials expect to spend an unbudgeted $24 million this fiscal year on beefed-up security at airports, the port of Baltimore, state build- ings and public events. To counter the costs, Governor Parris N. Glendening has ordered a state-wide hiring freeze, a hold on $65 million in capital projects and a 1.5 percent reduction in expenses in each state department--the sharpest spending cuts since the recession of the early 1980s. Similarly, Massachusetts' acting Governor Jane Swift has asked for $26 million in supplemental funds for public safety during this fiscal year.

While most jurisdictions budget for natural-disaster preparedness, that may no longer be enough. "There's been a sea change," says John Thomasien, of the National Governors' Association. "We now have to think about how we secure infrastructure."

Then there is public health spending. NGA, working with university experts, has developed model legislation to give local public health departments greater powers to investigate bioterrorism threats. If it passes, substantial spending hikes are certain to ensue.