Teachers, Firefighters, Cops Face More Layoffs: The Ticker

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By Mark Whitehouse

The economic slump has been very hard on teachers, firefighters, police and other local-government employees. Unfortunately, it looks like the layoffs are far from over.

Even as private employers add to their payrolls, municipalities are still shedding jobs. As of October, local governments employed 14,109,000 people, the Labor Department reported today. That's 463,000 less than they did when the recession officially ended in June 2009. About half of the lost jobs were in education.

There are various reasons to believe the job losses will continue. The federal government is cutting back on aid to states, which in turn may have to cut back further on transfers to the local level. At the same time, the property-tax revenue that makes up most of local governments' budgets are finally declining as home-value assessments catch up with the housing bust -- a process that can take several years.

The more property taxes fall, the deeper localities will have to cut. As of June, the 12-month total of local property-tax revenue had fallen 1.8 percent from its peak in September 2010, according to the Commerce Department. That's the largest sustained decline on records that go back to 1988 (see chart). But given the fact that house prices are down about 30 percent from their peak in 2006, property assessments probably have a long way to go.

Municipalities can offset lower home prices by increasing property-tax rates and relying a bit more on other levies, such as sales taxes. Still, if job cuts are commensurate to budget shrinkage, even a 2 percent drop in annual revenue would mean about 280,000 more jobs lost every year.

(Mark Whitehouse is a member of the Bloomberg View editorial board)

-0- Nov/04/2011 18:05 GMT