Last year, McLean County Treasurer Rebecca McNeil invested in money market accounts that earned more than 5 percent interest. | VIDEO: Should economic meltdown scare Flick?

This year, interest rates are just a little over 2 percent. "That's quite a difference and they continue to drop," she said.

While counties and municipalities don't invest in the stock market, what's happening in the market and the rest of the financial world still is having an effect.

For instance:

In the first nine months of 2007, the $16 million invested from a Livingston County landfill host agreement earned $548,700 in interest. For the same period this year, the county earned only $417,417 on $18 million in the account.

The interest from investments helps pay for county purchases and programs, said Treasurer Barb Sears. In one example, $500,000 in interest was used instead of levying a nursing home tax.

Rates for certificates of deposit also are declining. In an attempt to get the best rate, McNeil sought bids from 14 community banks. One came in at 3.7 percent; another 3.9 percent. The rest were around 2 percent.

"We're certainly not earning at the level we have been," said McNeil.

Pontiac Treasurer Oscar Kohlman is more concerned about effects from the overall current economy and the potential closing of Pontiac Correctional Center than city investments. The bulk of the city's finances is in certificates of deposit.

"I'd say we are in a dangerous situation right now (with the national economy)," Kohlman said. "Everything seems to hinge on somebody else. If we are in a slump and people don't pay real estate, sales or motor fuel taxes, then we will not get those funds."

Clinton and Lincoln officials expressed concern about the stock market effects on people with pensions.

"Everything we have invested is under $100,000 and are collateralized with agency securities so we are protected," said Clinton Finance Commissioner Tom Edmunds. "I don't see any long-term effects as far as the City of Clinton. The people who are getting hurt are those who have pensions."

Lincoln City Treasurer Les Plotner agreed. "As far as the city goes, we shouldn't be affected. But, those individuals who have money invested through their pensions could see some problems."

The financial turmoil has played havoc with Normal's variable rate for a bond issued in 2003. The town was paying 1.8 percent in interest in early September, but the rate increased to 4 percent by mid-month and 8.75 percent by Sept. 24.

Recently, it dropped to 5.75 percent. It's the only town bond with a variable rate.

The town issued a $10 million 2008 bond right before the markets' steep drop and got a fixed rate of 4.67 percent, said Finance Director Ron Hill.

Bloomington has a $14 million variable rate bond, but City Manager Tom Hamilton said choosing that changing rate has saved the city $500,000 in interest. The rate changes every Monday.

"So we are still ahead of the game," Hamilton said. "That rate would have to stay high for a long time to eat into that half a million."

Reported by Kevin Barlow, Mary Ann Ford, M.K. Guetersloh and Tony Sapochetti.