RANDOLPH

Local governments Randolph, Massachusetts facing Fiscal Pressure



Local governments Randolph, Massachusetts facing Fiscal Pressure

Introduction

A new Government Accountability Office (GAO) report that warns “the state and local government sector continues to face near-term and long-term fiscal challenges that grow over time” has reinforced the concerns of numerous state and municipalities over their ability to provide adequate public safety services, a problem that the National Governors Association (NGA) and other associations representing states and local governments have repeatedly warned about in recent years.

In November the NGA stated in its Fall 2011 Fiscal Survey of States that, “while the overall fiscal condition of states has improved from the depths of the recession,” the joint NGA and National Association of State Budget Officers (NASBO) survey “shows athat astates aare afacing aa a'big asqueeze' afrom aboth alocal aand afederal agovernments. aThe acombination aof athe aeffects aof athe aeconomic adownturn, atepid aeconomic agrowth and the expiration of Recovery Act and other federal funds has severely impeded the growth of state resources. Additionally, spending on Medicaid is expected to consume an increasing share of state budgets and grow much more rapidly than state revenue growth, resulting in slow or no growth in education, transportation or public safety."

Overall, state 2012 enacted budgets include nearly $667 billion in general fund expenditures, a 2.9 percent increase compared to $648 billion in general fund spending in 2011. Despite the second year with an increase, total enacted general fund spending in 2012 is still $21 billion less than the prerecession high of $687 billion in 2008, the survey found.

“At athe asame atime,” athe asurvey areported, a“local agovernment arevenues ahave abeen aseverely aimpacted aby athe adecline ain ahousing avalues. aMany alocal agovernments, aincluding aschool adistricts, arely aheavily aon aproperty ataxes ato asupport atheir aactivities. aThese ajurisdictions ahave abeen apressing astates afor amore alocal aassistance. a

“State agovernments aare afeeling athe asqueeze afrom athe ademands afor aspending afrom aboth alocal aand afederal agovernments,” said NGA Executive Director Dan Crippen. “Revenues are up slightly, but they do not yet meet 2008 levels, and the reduction of federal funds compounds the fiscal challenges for states.”

Discussion

According to the GAO's new audit, “The fiscal challenges confronting the state and local sector add to the nation's overall fiscal challenges” and that while “the fiscal situation of the state and local government sector has improved in the past year as the sector's tax receipts have slowly increased in conjunction with the economic recovery … total tax receipts have only recently returned to the prerecession levels of 2007 and the sector still faces a gap between revenue and spending. The sector faces long-term fiscal challenges that grow over time.”

Consequently, GAO report that the fiscal position of the sector will steadily decline through 2060 absent any policy changes. The stagnant economy, coupled to rising motor fuel prices, has put an inordinate burden on the public safety and emergency response capabilities of localities across the nation, as well as the capabilities of state emergency response operations and ...