Once-Profitable Services Are Killing Local Budgets

Utilities, transport, even gambling, are now $3.5B drains
By Harry Kimball,  Newser Staff
Posted Nov 23, 2009 11:52 AM CST
A city electrical meter.   (AP Photo)
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(Newser) – Municipally owned businesses like utilities, public transportation, and betting parlors used to bring in much-needed cash flow, but the recession has done its predictable work. State and local governments nationwide will likely hemorrhage $3.5 billion this year running these concerns which brought in upwards of $120 billion during the '90s. “With tax collections in decline, we really need this money,” one finance director tells USA Today.

Public transport is a big loser: Last year, systems across the country lost a record $32.2 billion, twice as much as a loss 10 years ago. In order to offset the double whammy of reduced tax revenue and negative profits, many governments are pumping up utility rates or slashing services. Or doing something else: New York’s Off-Track Betting is still sending money to Albany—but can’t cover its own expenses. Typical gambling behavior.