JEFFERSON CITY, Mo. – Facing severe revenue shortfalls, some states have found a convenient way of softening painful cutbacks and avoiding statewide tax increases: They’ve passed the buck to their counterparts in cities and counties.

Traditionally, many states help bear the cost of jailing inmates, paving roads, running libraries and providing other services in local areas. Now, states are paring back their payments, leaving local leaders to decide how to make up the difference.

“They’re shafting counties big time,” said Gene Oakley, the presiding commissioner of Carter County in southeast Missouri.

Missouri has cut its payments to counties for holding prisoners and made local police responsibile for conducting undercover stings on drinking and smoking. Yet Missouri lawmakers have declined to change a law barring counties from making their own midyear budget cuts.

States already have closed more than $174 billion in budget gaps during the 2010 fiscal year, according to the National Conference of State Legislatures. The group said three-fourths of states are projecting shortfalls next year totaling an additional $89 billion.

Local governments face many of the same problems, including declining sales or property tax revenues. And just as states depend heavily on federal money, many counties rely on state revenues to make their budgets.

In a recent national survey, municipalities blamed reductions in state aid for a third of the more than $56 billion shortfall they face for 2010-2012.

“In effect, we had to do double the cuts we normally would have had to make,” said Chris Bradley, a deputy budget director for Maricopa County, Ariz., the fourth-largest county in the United States. “We had to cut to cover our own revenue shortfall, then we had to cut to cover for them.”

State aid to Maryland counties has been cut to levels not seen since the early 1980s, said Harford County Executive David Craig, president of the Maryland Association of Counties. Some local governments are considering tax increases on cell phones, utilities and soft drinks to help cover the shortfall in state aid, he said.

“The governor was talking about doing more with less. I said, ‘We’re doing less with less,’” Craig said.

Because they are at the bottom of government flow charts, counties or cities typically cannot pass along the financial woes inherited from states. But some state officials say it’s appropriate for local governments to share the pain.

California this year borrowed about $2 billion from local governments’ property tax revenues, which will have to be repaid with interest in three years. It also took redevelopment money and transportation funding from local governments.

Michigan has cut the money it shares with local governments by one-third over the past decade. Local governments have responded by closing parks and fire stations.

Some Minnesota cities already had trimmed back on payroll, children’s library programs and public ice skating parks because of cuts in state aid. That was before Gov. Tim Pawlenty signed a plan in April cutting Minnesota’s projected $1 billion budget deficit by one-third, with the biggest slice coming from aid to cities and counties.

Oakley, the top official in Missouri’s Carter County, said the county may have to consider laying off one of its two sheriffs’ deputies to help offset cuts in state aid.

“I think it’s grossly unfair,” Oakley said. “They need to look for more ways to make government in (the state Capitol) lean before you get out here putting it on the backs of counties.”


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