Cities threaten to cut 500,000 jobs

NEW YORK (CNNMoney.com) -- Cash-strapped cities and counties have been cutting jobs to cope with massive budget shortfalls -- and that tally could edge up to nearly 500,000 if Congress doesn't step up to help.

Local governments are looking to eliminate 8.6% of their total full-time equivalent positions by 2012, according to a new survey released Tuesday by the National League of Cities, the National Association of Counties and United States Conference of Mayors.

"Local governments across the country are now facing the combined impact of decreased tax revenues, a falloff in state and federal aid and increased demand for social services," the report said. "In this current climate of fiscal distress, local governments are forced to eliminate both jobs and services."

The depth of the recession has pushed cities to make reductions in departments that are typically shielded from cuts because they provide core services to residents, including public safety, public works, public health, social services and parks and recreation.

In fact, 63% of cities and nearly 40% of counties reported cuts in police and fire safety personnel, the survey showed.

The report called on Congress to pass the Local Jobs for America Act, which would provide $75 billion in federal funds over two years to city and county governments and community-based organizations to save and create jobs.

"Federal investment that helps save local jobs and preserve local services will help stabilize communities across the country and ensure that all of America's families are able to participate in the economic recovery," the report said.

But the bill's fate is uncertain as mounting concerns over the national deficit hinder the passage of new stimulus measures.