U.S. 'stormageddon' latest pain on city, state budgets

CHICAGO/WASHINGTON Wed Feb 2, 2011 4:15pm EST

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CHICAGO/WASHINGTON Feb 2 (Reuters) - Wednesday's massive winter storm is the latest pain in the budget for U.S. cities and states 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, funds set aside to clear roads and sidewalks have run dry. To make matters worse, the price of salt used to melt ice and snow has doubled in recent years.

The latest storm comes as many cities and states struggle to balance anemic revenue and bigger demand for services due to the 2007-2009 economic recession.

New York City, which has already been through several rounds of snow this winter and estimates that each inch costs the city about $1 million, last week said it had 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 feeble budget.

Even without a major snow event since 1999, normal winter storms in subsequent years have pressured the budget of "The Windy City" as overtime and other costs fed into a deficit. Heading into fiscal 2011, which began on Jan. 1, the city dipped into reserves to help eliminate a nearly $655 million shortfall that represented 19.3 percent of its operating fund.

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."

Agencies are considering raising fees or reducing response times to snow storms, Hodne said. Some may raid funds for other services, which means that in the summer cities may forego repairing roads or laying down new pavement.

"One of the big costs that gets overlooked is the economic impact it has when you start shutting down road systems and transportation gets stifled," 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 mostly charged with clearing those highways.

Then there is salt spread over slippery snow: through the end of January Pennsylvania had used nearly 528,000 tons of it, according the state's transportation department. A shortage one winter 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.

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

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