A Wall Street Journal article titled ‘Belt-Tightening by States Squeezes Cities and Towns’ says that in a recent survey 18 U.S. States reported cutting local aid.  The Executive Director of the National Association of State Budget Officers is quoted as saying “we think that’s going to grow”.  The article also says U.S. “cities and towns are bracing for more big reductions in local aid and revenue-sharing from their state governments”, that “the cuts are forcing belt-tightening moves that are very visible to voters”, and in my view importantly that “for many cities, state-aid cuts come on top of falling local revenue” – all this at a time when States are running record budget gaps as their tax revenue plunges while expenses increase.

In the past I have commented frequently on this Blog about what I have said ‘Must be reducing revenues at all U.S. Government levels’, and continually address macro-issues at the U.S. Federal Government level.  At Federal and State levels it seems to me some of the more important things that need to be considered are infrastructure deterioration (particularly roads and bridges), and health/school/prison systems.  At the municipal level important ‘maintenance-type’ issues have to include municipal services including sanitary systems and waste disposal, policing, water purification, delivery systems, and so on.  If the current recession does not turn around in the near term it seems to me these and similar services will have to be reduced from prior levels and then maintained at those reduced levels – all of which will result in possible (or in some cases likely) reductions in safety, education, and – importantly – the general standard of living of the average citizen.  Since typically you can’t take things away from people and leave them happy, if these things occur it seems to me unhappy consequences may be a reduction in youth employment (since ‘family providers’ sensibly would be employed first) and a general increase in crime rates.

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