The State of County Finances : Progress Through Adversity
NACo Report Finds Recession Lingering on Many County Balance Sheets
County governments provide essential services to create healthy, safe, vibrant and economically resilient communities.
The Great Recession and the slow recovery affected both the county economies and the fiscal conditions of county governments.
Building upon the foundation laid by NACo’s Counting Money study on county financial reporting, this analysis examines trends in annual county revenues and expenses between 2007 and 2013, the latest year available for the majority of audited county financial statements.
Using the fiscal data from the largest group of county governments reporting their financials in the same format (2,112 counties in 45 states and the District of Columbia), this report sheds light on the effect of the recession on counties and provides direction on the fiscal recovery of county governments. The evidence suggests:
1. General revenue recovery has been slow and uneven across counties.
General revenues did not recover to 2007 levels in nearly half of counties (46 percent) by 2013, taking into account inflation. General revenues are discretionary funding, providing county boards the flexibility for allocating funds to needed services. This source of funding is primarily derived from taxes, fees and fines and any grants not restricted to a particular activity.
2. Counties are struggling with rising costs of mandated services.
For governments, economic downturns translate into less revenue and higher volumes of services, as they try to deal with unemployment, business closures and more people in need. This fiscal squeeze is even more pronounced for county governments, being primary social safety net providers on the ground. With the economic recovery slow to take hold across counties, county governments struggle to meet state and federal mandates while serving their residents at adequate levels.
3. State and federal funding is increasingly insufficient to cover for mandated county services.
No two counties are the same. Most often, states decide the role, structure and responsibilities for counties. As a result, counties differ in regards to the type and volume of services provided to residents. Counties are governed by locally elected officials and, in some instances, operate under home rule authority, which allows for more local flexibility and control with structural, functional and fiscal powers. Even within a state, counties vary in terms of services, depending on the availability of services from other levels of government, population size and density and extent of federal lands.
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