Arizona has a law where they are supposed to keep their budget balanced. Right now, there is a $1.3 billion budget deficit, which has prompted governor Janet Napolitano to initiate a state hiring freeze.
This is not really a great surprise to me. My husband was hired by the state early last year, and before he got past his probationary period where they can't fire you without an act of legislation, they started letting go of people left and right in the office he was working in (a lot of the employees were hired under a rule that allowed them to be let go). Every day there was somebody else going, and my husband started looking for a job before they gave him his two weeks notice. To hear that they are not going to hire any new people (except in some critical areas like health care) is not a surprise.
The amount of children enrolling in Arizona schools is less than expected however, which people believe is due to the new law that punishes businesses for knowingly hiring illegal aliens, so that should help, as there is not as great a need for teachers, and they may even have to cut staff.
Another local government running out of money is the city of Vallejo, California. Reuters is reporting that they are considering filing for bankruptcy. I suppose I can see how a Southern California town could be headed for financial problems right about now. Housing prices have been through the roof for years, and I'm sure that Vallejo received a lot of money in property taxes especially, because it is a very nice town with some very nice houses (I used to live in nearby San Diego). Vallejo could have easily gotten used to receiving a certain amount of revenues in property taxes, and as property values fall, revenues fall. Also, with people spending less, there would be less money in sales taxes coming in.
I wonder how many other local governments are having trouble balancing their budgets right about now? Vallejo is not the only city in the country that has seen astronomical housing values plummet. Just recently, interest rates for bonds have gone up, which will cause more strain to some of these locations.
When your local government runs low on money, the effect can trickle down to everybody in the area. Will they have to make pay cuts? Raise taxes? Delay replacing items that wear out like fire trucks? Cut back the library hours?
I don't live in Vallejo, and as far as I know, Arizona is not making any other cutbacks that might affect me, but this could be a sign of things to come. I hope not. Hopefully the city, state, and county governments in this country will take a close look at their budget and make the proactive cutbacks needed so they can balance their budget.
After Katrina, many people were left with the feeling that you can't depend on the government for help at all times, and you need to try to be prepared. That is still a good goal, especially when the resources of government are tapped.