"Stormageddon" latest pain for city and state budgets

CHICAGO/WASHINGTON Wed Feb 2, 2011 5:48pm EST

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CHICAGO/WASHINGTON (Reuters) - Wednesday's massive winter storm is the latest pain in the budgets of U.S. cities, states and counties as it sweeps across the North American continent, freezing finances along the way.

The snow and ice storm has hit some 30 states and a third of the U.S. population, some of whom have gone on their Twitter feeds to dub it "Stormageddon" and "snOMGeddon."

From Rhode Island to North Carolina, officials are having to pay for clearing roads and sidewalks, even though anemic revenue and bigger demand for services due to the 2007-2009 economic recession have driven wide holes in their budgets.

"It could not have happened at a worse time for county budgets," said Jacqueline Byers, director of research for the National Association of Counties.

After years of revenue losses, many counties deferred road and bridge maintenance or cut money for weather programs to preserve funding for public safety or healthcare, only to be confronted by two winters of heavy snow.

With the current storm, Byers said, "they're so busy fighting snow or moving it they haven't been able to figure out the cost."

To make matters worse, the price of salt used to melt ice and snow has doubled in recent years.

New York City has already been through several rounds of snow this winter and each inch costs the city about $1 million, according to Mayor Michael Bloomberg. Last week he estimated the city had used 200,000 tons of salt and exhausted its $38 million budget for snow removal.

In Chicago, which is flirting with records from the Tuesday-Wednesday storm, the costs could eat up much of the city's $14.8 million allocated for snow removal and hurt its already fragile budget.

The country's top snow wrangler -- Bret Hodne, the public works director in West Des Moines, Iowa, and recently named the Snow and Ice Control Award Winner for 2010/2011 by the American Public Works Association -- said agencies must make tough choices on snow removal.

"The money has got to come from some place," said Hodne, whose agency spent twice as much money on snow removal than was budgeted last year when the city was hit by a huge storm. "There aren't a lot of good solutions."

A shortage one winter of the salt spread to melt ice and snow led agencies to snap up salt the next. Over four years, prices went from $30 per ton to at least $60 per ton today, Hodne said.

Sales taxes, a key revenue source for many states and cities, will likely slump as snowbound workers and shoppers are unable to leave their homes due to a lack of public transit or dangerous road conditions. Moreover, shipping companies are stuck trying to move goods on highways across the country.

States are charged with keeping those highways clear.

"We're always going to look at finances but what we're really trying to concentrate on right now is the safety of the public," said John Erickson, spokesman for the Indiana Department of Homeland Security.

He added that the state has no estimates of the storm's cost, but it realizes there is "not a blank check out there."

Pressure is also mounting on public transit agencies, which must deal with the possibility that fares, which make up about a third of their revenue, can disappear as ridership drops. During snowstorms last February, New York's Metropolitan Transit Authority lost $8 million in fares.

Transit agencies always include room in their budgets for snow-related costs, but they too have been hit by the recession, said Greg Hull, director of security and operations at the American Public Transportation Association.

"The agencies have to bite the bullet and do whatever they can and in quite a few scenarios they will spend more than they budget," he said.

(Additional reporting by Joan Gralla and Edith Honan in New York and Susan Guyett in Indianapolis; Editing by Dan Grebler)

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