City governments feeling worst budget crunch in decades

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SANDY -- Utah cities and towns are feeling the sharp slide in the economy, facing revenue shortfalls and budget cuts. They're sailing in the kind of financial storm not seen in decades.

Sandy City Administrator Byron Jorgenson has been around the block, serving 31 years in managing and leading city hall in Sandy and Salt Lake through five recessions.

"This is the fifth downturn. This is for sure the most significant and difficult to deal with," Jorgenson says.

In June, he saw something he's never seen: Tax revenues were down $700,000 from what was budgeted from the prior year.

"June was our toughest month every," Jorgenson says. I think it's just the general economy--with home sales down, construction down, people being nervous and spending less."

Typical of many cities, more than one-third of Sandy's revenues come from state sales taxes generated when a dealer sells a car or someone buys something from a big chain store. But sales taxes for local cities are taking a beating--down almost 13 percent compared with a year ago.

Neil Abercrombie is the director of budget and policy research for the Utah League of Cities and Towns. He says, "It's a major revenue source for cities. With the decline in consumer spending, it's caused historical declines in sales taxes. It's caused huge budget losses."

A survey of 90 cities and towns finds 41 percent say they are decreasing infrastructure spending; 41 percent are restricting employee travel; 35 percent are using rainy day funds, and one-third are decreasing staff size.

Sandy will delay construction and building projects and limit employee travel and training, but the city does not plan to raise fees, taxes or dip into its rainy day funds. It plans to ride the storm out.

"If you've looked at all of the departments, they've saved wherever they could to build a cushion that we can use next year if we need to," Jorgensen says.

According to one national study, state and local revenues for the first quarter of 2009 were down nearly 12 percent. It's the sharpest drop in at least four decades, when the census started tracking that information.


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