Federal Budget Impasse Hobbles Local Governments

The continuing impasse over the federal budget has created so much uncertainty about future aid to local governments that lawmakers and administrators in the nation’s counties are contemplating drastic measures, such as closing libraries and parks or imposing hiring freezes, officials said Saturday.

“There is a high frustration level over our inability to make plans,” said Larry Naake, executive director of the National Assn. of Counties, which is meeting here. “Because of what’s going on, we don’t know what we’re going to do.”

In California, for example, where the fiscal year begins July 1, “even under normal circumstances, they don’t know what they’re going to do until October [when the federal fiscal year begins], and now it’s already March,” said Naake, a former head of the California State Assn. of Counties. “They’re eight or nine months behind and still don’t know what the federal budget’s going to be.”

For the moment, federal dollars continue to flow under stopgap legislation. But what worries officials in county and other local governments is the possibility that when President Clinton and congressional Republicans eventually reach agreement on the budget, they will reduce spending levels retroactively.

“The danger is that they will come up with a seven-year plan with reductions that go back to October, so it’s like spending money you don’t have,” said Steve Szalay, executive director of California State Assn. of Counties and former administrator of Alameda County. “It’s disconcerting. It’s likely we’ll have to cut further--so we’re very anxious. And we cannot afford to wait without starting this planning process.”

Federal funds are important in the financing of a host of local programs and services. In particular, states and local governments depend heavily on matching funds from Washington to help pay for Medicaid and welfare.

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Because those programs are legally mandated, if federal dollars are not available, local governments may have to free up local tax dollars by closing libraries and parks, deferring such services as road maintenance, postponing the replacement of old police cars, or even reducing such vital services as fire protection, Naake said.

“When Butte County [Calif.] was facing reductions a few years ago and they could not raise taxes--because the citizens wouldn’t have stood for it--they began reducing other services,” Naake said. “The first thing they did was close the libraries. Then the recreational facilities, like parks.”

Although this has happened in the past, it has been on a small scale. However, “we’ve never had a situation at the federal level where this has gone on so long,” Naake said, referring to the budget impasse.

A survey of county officials released by the organization this weekend had one piece of good news for their constituents: There was overwhelming opposition to raising property taxes. The bad news, however, is that they expect to reduce staff, cut services, impose hiring freezes and postpone capital projects, the survey showed.

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The organization called upon Congress to enact--and the president to sign--a permanent continuing resolution to fund the federal government through the end of the federal fiscal year.

“This resolution should contain only those provisions which are acceptable to both the Congress and the administration,” said Michael Hightower, president-elect of the National Assn. of Counties and Fulton County, Ga., commissioner. “The time for using the spending bill as a political football has ended. Counties must know exactly what to expect from the federal government for funding the rest of this federal fiscal year.”

Hightower said Congress and the administration also should continue to negotiate their differences on welfare and Medicaid, and should consider proposals recently put forth by the National Governors’ Assn. “Clearly, reforms are needed in welfare and Medicaid, but these reforms must not come at the expense of the county property taxpayer,” Hightower said.

The survey indicated that most county officials believe that local governments will not necessarily share in the savings realized through plans for the devolution of federal authority to the states. Eighty-two percent said they expected either less assistance from the states, compared to previous years, or little change from last year.

Naake described the current operating mode as one of “uncertainty.”

“If they knew something, they could plan,” he said. “That’s why we’ve called on the federal government to quickly resolve this.”