NACo: Counties’ Liabilities Up, Revenues Down

Counties across the country must pay more for required services but are receiving less revenue in taxes, fees, and intergovernmental grants, according to  The State of County Finances: Progress Through Adversity, the National Association of Counties (NACo)’s latest paper in its Trends Analysis series. The analysis examines trends in annual county revenues and expenses from 2007 to 2013, the latest year available for the majority of audited county financial statements. The paper makes three main points:

  • General revenues – discretionary funding derived from taxes, fees and fines not restricted to any particular application – did not return to pre-recession levels by 2013 in 46 percent of counties.
    • Large counties – those with populations higher than 500,000 – were affected most severely, with more than two thirds not yet recovered.
    • Property tax revenues drove counties’ financial performance, comprising 72 percent of county general revenues in 2013.
    • The recession and slow recovery suppressed consumer spending, and thus sales tax revenues.
  • Counties are struggling with rising costs of mandated services. Addressing state and federal mandates led to 48 percent of counties seeing higher expenses in 2013 than in 2007 (after adjusting for inflation).
    • Criminal justice and public safety expenses rose for 65 percent of counties during the five-year period.
    • Transportation expenses rose in 54 percent of counties.
    • Water, sewer and solid waste costs rose in 44 percent of counties.
  •  Dedicated state and federal funding covered a smaller share of expenses for 59 percent of counties.
    • For the majority of counties, state and federal transportation grants covered 43 percent of operating and capital transportation expenditures.
    • Specific county service fees, such as water rates, funded a higher proportion of county expenses in 45 percent of counties.
    • While in 2007, 82 percent of counties achieved a surplus, only 71 percent did so in 2013.

Read the full report and find links to interactive data here.