Local Governments Feeling Pain From Economy
Monday, October 06, 2008 5:56 AM
Symbols: LEH, STL
(Source: St. Louis Post-Dispatch)trackingBy Kevin Mcdermott, St. Louis Post-Dispatch

Oct. 6--It isn't just Wall Street and Main Street reeling from the national economic crisis. City Hall is feeling it, too.

In St. Louis, financing for renovations at the airport and the municipal courts has been stalled by the same lending crunch that has made it harder for consumers to take out car loans.

St. Charles County, hit with flat sales tax receipts, is freezing all nonessential travel.

Jefferson County, which has seen a decline in fee revenue, is leaving county job vacancies unfilled. The city of Arnold, struggling with high fuel costs, is considering charging residents for their garbage service, which is currently free.

Missouri figures released Friday show individual and corporate income taxes down in September, numbers that state Commissioner of Administration Larry Schepker declared "cause for concern."

In Illinois, state treasury investment returns are plummeting, further strapping a state that was already on the verge of shuttering its parks and historic sites.

The economic crisis is shaking the pillars of government from several directions: Wobbly retail and industry performance is dragging down tax revenue that various levels of government need to function. The credit crunch is making it harder for local governments to finance projects.

And most daunting, the drop in consumer confidence (translation: people buying less) is hitting local governments right where they live.

"As consumers cut back on their spending, sales tax revenue declines," said Gary Markenson, executive director of the Missouri Municipal League.

Less public money -- and more difficulty in borrowing it -- leads cities to cut back on services and put off public works projects, "which ripples through the economy, because those are jobs," he said.

Predictions of increased unemployment are expected to further diminish local government revenue. Already, Markenson said, local governments have seen their tax revenue flatten, and most expect it to actually start falling soon.

In some places, it has already happened. Sales tax revenue in St. Louis dropped in the quarter ending last month, marking the fourth consecutive quarter of decline, said Paul W. Payne, the city's budget director.

"It's a small decline, but it's still a decline," Payne said. "The problem is (determining) whether sales tax is an early indicator -- is it a canary in a coal mine?"

Other forms of government revenue are also lower. In Madison County, revenue is down about $2 million from what was projected, with half of that due to declines in recorder-of-deeds fees.


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