Schools, fire crews face cuts across US
US economy edges back, but tax shortfalls leave states and cities scrambling to cope.
WASHINGTON — The nation's economy may be showing budding signs of spring. But many of America's states and cities are still in the throes of a dark budgetary winter.Â Alabama's finances are tight enough that the state is set to halt most civil jury trials until Oct. 1 to save money.
Â New York City Mayor Michael Bloomberg is proposing $1.9 billion in cuts amid a $5 billion budget gap. He wants to suspend the recycling program, the nation's largest, and may even cut the city's vaunted fire department. Â Oregon's 17 community colleges are raising tuition next year, reportedly by 12.5 percent, on top of an 8.6 percent jump this year.
In all, states and cities that could afford to cut taxes and boost spending in the golden-goose 1990s are facing their first extended budget shortfalls in a decade. Forty states have, or will, cut spending amid a combined $27 billion budget gap. Medicaid, colleges, and prisons are most often trimmed. Other stopgap measures: raising taxes and raiding tobacco-settlement funds.
Like the overall economy, states and cities are expected to rebound eventually. But it takes time for the turnaround in the economy to channel more money into state tills.
"If the economy really is moving back into growth, that's going to help states down the line," says Nick Jenny of the Nelson A. Rockefeller Institute of Government in Albany, N.Y. "But they won't get the benefits of that until later this year, so they're being very cautious about putting budgets together."
Cautious indeed. Twenty-nine states are trimming higher-education budgets, according to a new survey by the Denver-based National Conference of State Legislatures (NCSL). Twenty five are cutting prison funds, 22 are trimming Medicaid, and 17 are downsizing K-12 education, often the biggest line-item in state budgets.
The cutbacks are rippling through many local walks of life. Starting April 29, many civil jury trials in Alabama will be halted or postponed because of a $2.4 million shortfall in what court officers say they need. Local officials are scrambling to fund criminal jury trials Â- so jails don't back up with suspects who could start filing lawsuits charging they didn't get a speedy trial.
In fact, Jefferson County, which includes Birmingham, is loaning "hundreds of thousands of dollars" to the state to keep criminal trials operating, says County Commission President Gary White, who doesn't expect the state to repay the money. "We are going to step up to the plate," he says, but "we'll never see that money again."
Even normally flush states are feeling the effects. Momentum in Alaska is growing for levying an income tax, which hasn't been done in 21 years. With the state's petroleum output down because of the economy, oil-tax revenues have slipped. Gov. Tony Knowles (D) is calling outright for income taxes, though politically safer new fees on alcohol sales and cruise-ship passengers are likely.
In New York City, Mr. Bloomberg is getting cheers from some fiscal watchdogs for his even-handed budgeteering strategy: across-the-board cuts. But firefighters and environmentalists aren't so pleased. Officials say eight fire-department engine companies may be eliminated if no federal or state funds come through. Bloomberg would also suspend recycling for 18 months, to save an estimated $56 million.
The most controversial cuts may be in education, especially K-12 programs, which have broad political constituencies. But "ironically, that's where the money is," says Mr. Jenny, "so it's hard to go anywhere in budgeting without looking at schools."
Boston's school district, for instance, faces a $41-million cut under one legislative plan. Already more than 20 percent of its 5,000 teachers are set to be laid off next month, according to district officials.
Cleveland's schools, facing $2.4 million in reductions, plan to lay off 20 teachers and may start charging students to participate in after-school sports. Montgomery County, Md., is scheduled to close three popular early-childhood-education centers.
Nor are colleges exempt from the funding reductions. Many universities are raising tuition rates to bridge gaps. Georgia colleges will boost tuition 4 to 6 percent next year, while Minnesota schools are looking at a 10 percent rise. The University of Massachusetts at Amherst is eliminating seven varsity sports teams.
Medicaid is another target for cuts. It's the program most cited in the NCSL survey as having cost overruns. Mississippi's legislature ended its session April 12 without a plan to make up a $120 million Medicaid shortfall. Gov. Ronnie Musgrove (D) is trying to forge a compromise Â- before health services for 650,000 residents are scaled back.
The overall political impact of always-unpopular cuts isn't yet clear. Most of the budget trims aren't likely to be as dramatic as during and after the 1991-92 recession, says Mr. Jenny, so neither will be the fallout, unless the economy doesn't recover.
Still, many politicians are trying various schemes to avoid controversial moves. The most common is tapping "rainy day" funds built up during the prosperous 1990s. But seven states have raised Â- or plan to raise Â- taxes. And four Â- Illinois, Ohio, Rhode Island, and Washington Â- have expanded gambling in hopes of boosting revenues.
In other cases, local residents are doing what they can to avert cutbacks. In Prairie Villiage, Kan., children recently brought home notes in their backpacks suggesting that each family contribute $200 to save Belinder Elementary School's nurse, guidance counselor, and French teacher. Their take so far: $30,000.