Local, state government workers feel heat

For years, most people who worked for state or local governments accepted a fact of life: Their pay wasn't great. The job security was.

Now that's gone, too.

States and municipalities are facing big budget gaps. Many responded by slashing services, raising taxes and making deep job cuts.

Some economists say the job cuts could worsen in the second half of the year.

Those government layoffs make it harder to reduce the national unemployment rate, now 9.5 percent. The rate did fall slightly in June because more than a half-million out-of-work Americans gave up their job searches. Once people stop seeking work, they no longer are counted as unemployed.

The economy is already under pressure from weak consumer spending, sinking stock prices, a European debt crisis and a teetering real estate market.

"It's certainly a drag on economic growth in our outlook," Mark Vitner, an economist at Wells Fargo, said of the loss of public-sector jobs.

It's also a burden for residents. As state and municipal employees are cut, so are services. It takes longer to register a car, see a school nurse or travel to work by bus.

In California, state-run Department of Motor Vehicle offices have been closed on selected furlough Fridays to cut costs.

In New York City, a new budget will close up to 30 senior centers, shutter a 24-hour homeless center in Manhattan and eliminate nurses at schools with fewer than 300 students.

In Atlanta, the metro transit agency shut 40 bus lines and closed restrooms in June. Even so, 300 employees might lose their jobs to close a $69 million budget gap.

Julie Bussgang once had assistants to help her keep order in her kindergarten classroom in Albany, Calif. Last year, Bussgang was left on her own.

"I've had kids calling for help from the bathroom, and I was alone with 24 kids," Bussgang said. "We got through far less of the curriculum than we did in the previous year. Everything took longer."

State and local governments cut 95,000 jobs in the first half of the year even as the economy slowly recovered. Private employers added 593,000 jobs in that time. It's the first time since 1981 that the public sector has cut jobs while the private sector has added jobs, said Marisa Di Natale, a director at Moody's Economy.com.

In the second half of the year, 152,000 more local and state government employees will be laid off, said Nigel Gault, an economist at IHS Global Insight.

Counting companies that work with state governments, a total of 900,000 jobs could be lost to states' budget shortfalls, according to the Center on Budget and Policy Priorities, a think tank.

From teachers and probation officers to recreation workers and transportation specialists, public employees who never imagined their jobs could be in jeopardy are discovering they are.

They are people like 24-year-old Brianna Clegg, who had never hesitated to take on school loans in pursuit of her teaching certificate.

"I was always hearing, 'There's a huge need for teachers.' "

Yet as California's budget crisis mounted last year, thousands of teaching jobs were slashed. One was Clegg's job teaching fourth grade in Stockton, Calif.

When she sought another position, she made a grim discovery: In a state in which roughly 26,000 teachers have been laid off, openings existed for 39 teachers. Clegg wasn't among the fortunate few.

Across the country, the trouble stems from shrinking state income and sales tax revenue, a consequence of the recession. Total state revenue fell 11 percent from fiscal year 2008 to fiscal 2010, according to the National Association of State Budget Officers.

Democrats in Congress have failed to come up with the votes to spend about $50 billion to help states pay for Medicaid programs and avoid teacher layoffs. Governors made a plea for the money to help them avoid layoffs. Kansas Gov. Mark Parkinson said his state might have to lay off 3,600 teachers.

Senate Republicans have argued that the nation can't afford further spending in light of record-high budget deficits.

Until recently, state governments had been able to paper over some of their funding shortfalls with money from last year's $787 billion federal stimulus package. Now that's drying up.

As a new fiscal year begins this month in most states, they are struggling to balance their budgets, as required by every state but Vermont.

So they're cutting services and laying off employees.

Hardest hit have been states such as Nevada, California and Arizona, whose housing markets overheated and then deflated, said Brian Sigritz of the National Association of State Budget Officers. But budget crises have spread nearly everywhere. About 46 states face total budget gaps of at least $112 billion this year, the Center on Budget and Policy Priorities says.

At least 26 states have cut jobs this year to close budget deficits. Five others have imposed temporary layoffs. Their tight budgets have led many states to shift more spending burdens to localities, adding to budget problems there.

The sense of long-term security that once attached itself to a state or local government job is gone.

One is Daryl Seaman, who was so confident in his job security just a year ago that he built a new house for his family. As a probation officer for Madison County, Ill., he didn't think his job would ever be in jeopardy.

Twelve months later, Seaman has been demoted because of county budget cuts. He finds himself obsessing with co-workers over the next round of layoffs that could claim their jobs.

His wife teaches in a district that has laid off some teachers with less seniority. With two teenage daughters to support, they're saving everything they can.

"We're just afraid to spend any money," Seaman said.