A decline in property tax revenues and investment earnings related to the nation's high foreclosure rate is pushing many counties to the brink of crisis, according to a snapshot study by the Washington-based National Association of Counties (NACo). As a result, many counties are considering cuts in service.

Large counties on both coasts, in particular, are experiencing multi-million dollar budget shortfalls. San Bernardino County, Calif., is facing a $46 million shortfall, and Montgomery County, Md., is $297 million short. "All signs are pointing toward the worst financial crisis for counties since the aftermath of 9-11," NACo Executive Director Larry Naake said in a statement. "The initial wave of fiscal crisis is upon us and, unless something is done at the federal level, more counties will be forced to cut services, lay off workers and raise local property taxes.”

Reduced sales tax revenues and rising gas prices are contributing to the crisis. NACo is calling on Congress to modernize the Federal Housing Authority and overhaul regulation of the Fannie Mae and Freddie Mac programs, and to increase funding to the Community Development Block Grant program.