Wednesday, June 20, 2012

Just in time for the elections


With the Republican/Teabaggers having cut off most state aid from the federal government and state revenues still not recovered from the Bush Depression, the next round of layoffs at the local level should hit the economy just in time for the election.
Government payrolls grew in the early part of the recovery, largely because of federal stimulus measures. But since its postrecession peak in April 2009 (not counting temporary Census hiring), the public sector has shrunk by 657,000 jobs. The losses appeared to be tapering off earlier this year, but have accelerated for the last three months, creating the single biggest drag on the recovery in many areas.

With the economy expanding, albeit slowly, state tax revenues have started to recover and are estimated to exceed prerecession levels next year. Yet governors and legislatures are keeping a tight rein on spending, whether to refill depleted rainy-day funds or because of political inclination.

At the same time, costs for health care, social services, pensions and education are still rising. Fourteen states plan to resolve their budget gaps by reducing aid to local governments, according to a report by the National Governors Association and the National Association of State Budget Officers.

So while the federal government has grown a little since the recession, and many states have recently begun to add a few jobs, local governments are making new cuts that outweigh those gains. More than a quarter of municipal governments are planning layoffs this year, according to a survey by the Center for State and Local Government Excellence. They are being squeezed not only by declining federal and state support, but by their devastated property tax base.
It is almost as if everything is going according to plan.

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