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Rural counties hit hardest by state, federal budget cuts

A report released today by the Budget and Tax Center offers a new perspective on how budget cuts at the state and federal level disproportionately impact North Carolina’s rural local governments and communities. Local governments have long filled a singular role by investing in community development and increasing access for individuals and families to education and other supports necessary for a vibrant and growing middle class. But today, rural county governments are less able than urban counties to sustainably fund their operations at current service levels.

Rural counties also exhibit troubling signs of widespread economic hardship in the form of high shares of residents living in poverty, a higher share of residents who have no form of either public or private health insurance, and lower overall wealth as indicated both by county median income and assessed property values. Furthermore, many are heavily reliant on state and federal funding to support core governmental operations, but all less able to raise revenue to bridge their own budget shortfalls, leaving only drastic measures for balancing budgets such as cutting or eliminating local jobs and core services that support economic recovery.

The report finds that:

  • Rural counties have lower median incomes and lower assessed property values than urban counties, which means they can’t raise as much revenue locally as they may need to bridge state and federal funding cuts.
  • Rural counties are far more dependent on state and federal revenues to fund governmental operations, such as state and federal funding for social services, and state lottery funding for school construction. Many of the same counties that are persistently poor are also highly dependent on state and federal support: Bertie, Columbus, Halifax, Robeson, Tyrrell, Washington.
  • North Carolina’s local governments represented only 1.7% of total employers in the state, but employed 11.5% of the state’s total workforce. In NC’s 85 historically rural counties, local governments employ 16.7% of total county workforce on average, compared to 11.3% in the 15 historically urban counties.

Rural Counties Most Dependent on State and Federal Support

The best tool available to lawmakers to address these disparities and lay the foundation for rural economic growth is the state budget. An equitable and adequate state budget in combination with an adequate, stable, and fair state revenue system would go a long way to expand economic opportunities for residents of all North Carolina’s communities, particularly those living outside its biggest cities.

3 Comments

  1. Alex

    February 11, 2012 at 8:11 am

    I hope they didn’t spend too much time doing this study that is fairly obvious to anyone but a third-grader. All of the manufacturing jobs have moved overseas, and the populations are aging quite rapidly, so many of these small towns will eventually be ghost towns in the future. I could have saved them a lot of time and effort. Combining several of the counties into a larger district might be a short term solution.

  2. David B Scott

    February 13, 2012 at 8:03 am

    It’s ironic to me that most tax-supported business incentives continue to go to the wealthiest counties while the poor areas continue to suffer. The rich get richer. Eastern NC is quickly becoming a third world country.

  3. Kaye Ratliff

    February 15, 2012 at 11:00 am

    I agree with David Scott, except that it’s not just Eastern North Carolina. The most significant # here is that 85 of NC’s counties are rural. Raleigh (ie State Government) operates as though the only significant things happen in Metrolina or in the Beltway. When I worked in a public agency, (the Mental Health system which has since been destroyed for all practical purposes), I served on a lot of local Boards. The most dreaded words we ever heard were “I’m from Raleigh and I’m here to help.” That is because their “help” usually consisted of imposing urban solutions to rural problems.