Nation's downturn hurting Tenn. cities, counties - WMC Action News 5 - Memphis, Tennessee

Nation's downturn hurting Tenn. cities, counties

NASHVILLE, Tenn. (AP) - Tennessee counties and cities also are suffering from what may be the nation's worst economic downturn since 1982, officials said.

Sales tax revenues already are down, property tax delinquencies are expected to rise and costs in areas from education to asphalt are growing.

Chad Jenkins, deputy director of the Tennessee Municipal League, which represents towns and cities, said the situation is "kind of the perfect storm."

"I think, not unlike the state, the economic conditions that exist - the market, gas taxes, our gas prices, sales taxes, the price of homes, the foreclosures - all of those are having an impact on revenue," he told the Chattanooga Times Free Press.

Jenkins was one of several officials who recently described local governments' increasing problems to the General Assembly's Fiscal Review Committee and House Finance Committee.

The local government plight comes as Gov. Phil Bredesen plans to cut up to 10 percent from spending next year to deal with a shortfall that could hit $800 million. The governor began budget hearings last Monday.

David Connor, executive director of the Tennessee Association of County Commissioners, said the state's 95 counties also are feeling the pain.

Twenty-two counties in the fiscal year ending June 30 saw a decrease in sales tax revenue, Connor said. This year, there are about 37 affected counties, he said, noting those counties make up nearly 60 percent of the state's sales tax base.

As home prices fall and families cut back on spending, more property tax delinquencies can be expected, Connor said.

County highway departments also face problems, Connor said, noting counties must maintain a five-year average for funding. If a county government cuts spending, state officials "will cut you on your state gas tax, dollar for dollar."

The TML's Jenkins said when "you have a situation such as you do today with the economic conditions, and people have to make choices where they give their paycheck, they're going to protect their home, put food on their plate first, and the property tax doesn't rank real high in that hierarchy of need.

"We have seen and expect that people will not pay property tax or not pay all of it or pay it late, and that creates cash flow problems," he said.            

Information from: Chattanooga Times Free Press, http://www.timesfreepress.com             

(Copyright 2008 by The Associated Press.  All Rights Reserved.)      

Powered by Frankly