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The Nation

March 20, 2011

Economy's strain on local governments grows severe

GARDNER — A sign welcomes visitors to "historic" downtown Gardner, Mass., but history is one of the few things this city of about 20,000 residents has going for it these days.

While it still proudly calls itself "Chair City," the heyday of fine-furniture manufacturing has long past and unemployment stands at about 11 percent. This blue-collar community about 60 miles west of Boston is grappling with a local economy that is generating less tax revenue for basic services and a state government drained by the Great Recession with less money to spread to its municipalities.

Gardner is typical of countless cities and towns around the country compensating with reduced services. Older children no longer have school buses. Public library hours have been slashed. Waits are longer at the assessor's office because of fewer staff. Layoffs have also hit the public works department and local teens can no longer be hired in the summer to spruce-up parks and playgrounds.

"I'm supposed to be doing more, with a heck of a lot less," said Mayor Mark Hawke, a Republican whose city now is receiving less state money than it got a dozen years ago, yet has been saddled by the state with more responsibilities, known as local mandates.

His lament is a familiar one in cities and counties across the country. Gardner's woes come amid a fiscal squeeze unlike any in modern history and are emblematic of the rough road ahead for local governments.

Governors and legislators in many states — themselves struggling with gaping budget holes — are slashing local aid and proposing to push even more duties down the government ladder in a dramatic restructuring of the relationship between states and their local governments.

The financial strain has some city and county officials searching for ways to alter promised pension and health care benefits. Some analysts are forecasting a rise in municipal defaults, in which local governments are unable to pay the principal or interest on the bonds they have issued. When that happens, their credit ratings typically drop and it becomes more costly in the future for governments to finance improvements to roads, buildings and other projects. For the public, that could mean cuts in services or tax increases.

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