DALLAS – Only 7% of the nation's 3,069 counties have fully recovered from the 2008 financial crisis and falling oil and gas prices threaten to undermine many of the counties that have recovered, according to the National Association of Counties.
In a national study, "County Economies 2015,"
Across all four categories, 214 counties or about 7% had regained ground lost to the recession.
By contrast, almost 16% of county economies had not recovered on any indicator by 2015, mostly in the South and Midwest. In Florida, Georgia, Illinois and Mississippi, more than a third of their county economies still suffering from the latest downturn across all economic indicators.
"County Economies 2015 reminds us that the national picture of the U.S. economy can obscure what is happening on the ground," said Emilia Istrate, NACo's director of research. "Economic growth is spreading, but most county economies have not recovered to levels seen before the recession."
In one of the rating categories, the study found that 462 more county economies returned to their pre-recession unemployment rates than the previous year. In a similar number of county economies home prices recovered to their pre-recession peaks.
Nearly half of county economies experienced growth across all indicators, still falling short of pre-recession levels in most cases. But 36% saw declines in economic output.
Most of those that bounced back are in states benefiting from the energy boom, the study said. Last year, 72 of the recovered counties were in Texas, the most of any state. Nebraska followed with 22. Minnesota, Kentucky, North Dakota, Montana and Kansas each had at least 10 fully recovered counties.
However, more than half of oil and gas county economies experienced economic output declines.
In 27 states, not a single county had fully recovered, the report said.
Some of the nation's largest counties finally recovered from the recession in 2015, including the counties containing Denver, San Francisco, San Jose, Dallas and Columbus, Ohio. In 2014, no county with more than 500,000 residents had fully recovered. Last year, 17 of 126 had, the study found.
The recovery is spreading out from the energy-rich center of the country—in part because a massive drop in oil prices is reversing job creation there while providing an economic benefit to larger metro areas near the coasts.
Last year saw slower economic output growth in 13% of county economies, mostly in small counties with fewer than 50,000 residents and mid-sized counties with populations between 50,000 and 500,000 residents, the study reported.
Further, economic output declined in more than a third of county economies, mostly in small counties in Georgia, Illinois, Kansas, Kentucky, Mississippi, Missouri, Nebraska and Texas. Ten percent of them are oil and gas counties. Overall, more than half of oil and gas county economies experienced declines in economic output in 2015.
In a report from the U.S. Energy Information Administration Jan. 12, oil and gas producing states were shown to be suffering a steep drop in oil and gas severance taxes.
Six states strongly affected by this budget squeeze are Alaska, Texas, North Dakota, Wyoming, Oklahoma, and West Virginia.
Alaska's severance tax revenue has fallen further and faster than other states because its tax is based on the operators' net income rather than on the value or volume of oil extracted, the report said. In 2015, when average net incomes after operating and capital expenses were near zero, the state derived practically no revenue from this tax, versus more than $5 billion in 2012. Based on 2014 data, severance taxes accounted for about 72% of the state's tax revenue.
In North Dakota, total severance tax revenues fell from more than $3.5 billion in 2014 to $2 billion in 2015 as oil prices declined. The state's general fund budget collections from July through November 2015, the first five months of the 2015-17 two-year budgeting period, were $152 million, which was 8.9% below the budgetary forecast.
In Texas, revenues from natural gas production and oil production and regulation were down 48% and 51%, respectively, from a year ago.
In Wyoming, the state revised its 2015-18 severance tax downward by nearly $160 million from January 2015 projections.
Although severance taxes accounted for 8% of Oklahoma's revenue collections in 2014, collections from state sales taxes and individual and corporate income taxes are also significantly affected by oil and natural gas prices. The state faces a fiscal year 2017 budget deficit of $900 million on a general fund budget of nearly $7 billion.
