U.S. local govts warn: More jobs will be axed

WASHINGTON, July 27 Tue Jul 27, 2010 12:00pm EDT

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WASHINGTON, July 27 (Reuters)- Local government revenue has dwindled so severely that U.S. cities and counties will have to cut hundreds of thousands of jobs in the coming months, leaving communities without basic services and pressuring jobless rates, according to a new survey.

The survey, released on Tuesday by three government associations, aims to press Congress on pending legislation that would give them $75 billion over two years to preserve jobs.

Local and state government employment accounts for more jobs in the United States than construction and manufacturing combined. The survey by the National League of Cities, National Association of Counties and U.S. Conference of Mayors found that they are the primary employer in many communities.

Those surveyed -- 214 cities with populations of more than 25,000 and 56 counties of more than 100,000 people -- reported they will cut 8.6 percent of their full-time positions from 2009 through 2011.

"If applied to total local government employment nationwide, an 8.6 percent cut in the workforce would mean that 481,000 local government workers were, or will be, laid off over the two-year period," the report said.

Currently, the U.S. unemployment rate stands at 9.6 percent.

The groups warned that job losses could climb even higher as many states struggle with their own budget gaps and cut aid to cities and counties. For an analysis, see [ID:nN28190621]

"Local governments across the country are now facing the combined impact of decreased tax revenues, a fall-off in state and federal aid and increased demand for social services," the report said. "Over the next two years, local tax bases will likely suffer from depressed property values, hard-hit household incomes and declining consumer spending."

So far, more than one-half of cities and more than one-third of counties have cut staffing for police, safety and firefighting in response to the deep recession that began in 2007. The proportion is surprisingly high, given that "cities and counties almost always seek to protect public safety services."

"For some communities this means fire and police stations that are closed and the potential for reduced capacity to respond to emergencies," the report said. For an analysis, see [ID:nN30247362]

A majority of cities and counties are cutting public works staff such as trash collectors, and postponing infrastructure projects such as highway repairs.

The cuts will trickle into the private sector because they will limit the number of contracts companies can bid on, according to the survey. (Reporting by Lisa Lambert; editing by Jeffrey Benkoe)

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