- The Washington Times - Saturday, November 15, 2008

Three big-city mayors asked the federal government Friday to use a portion of the $700 billion financial bailout to assist struggling cities.

They sought help with the pension costs, infrastructure investment and cash-flow problems stemming from the global financial crisis.

The mayors - Michael Nutter of Philadelphia, Shirley Franklin of Atlanta and Phil Gordon of Phoenix - made their request in a letter to Treasury Secretary Henry M. Paulson Jr.

Mr. Nutter said cities are facing an economic crisis not seen since the Depression and need help just like financial institutions.

“I want to make sure that cities and metro areas are at the table, that their voices are being heard, that our challenges and problems are well understood, so that we can get relief,” Mr. Nutter said.

President-elect Barack Obama also has called for some sort of aid to state and local governments so they don’t have to raise taxes or lay off workers while the federal government is trying to revive the economy, but he hasn’t proposed or endorsed a specific aid plan.

On Thursday, groups representing the nation’s mayors and governors asked Congress to jump-start the economy by increasing food-stamp payments, extending unemployment insurance and boosting funding for Medicaid.

Chris Hoene, director of policy and research at the National League of Cities, said Friday that revenue is down 4.3 percent from last year in American cities. He said cities are in what looks like the first wave of a three- to four-year financial decline. He said revenue from property, income and sales taxes are all down at the same time for the first time in a survey taken since 1985, and widespread cuts in services are likely.

“What we’re seeing happening right now in the economy is going to be playing itself out for the next several years,” Mr. Hoene said.

The three mayors proposed providing loans to help cities pay pension costs. They also want $50 billion in loans for investment in infrastructure, and additional one-year loans to cities unable to borrow cash because of the tight credit markets.

Mr. Nutter said he met with Phillip Swagel, Treasury’s assistant secretary for economic policy. He said Mr. Swagel “completely understood that we have major problems, in big and small and medium-size cities all across America, and they want to be helpful. It’s just a matter of figuring out what’s the best way to do it and what works best.”

Asked about the request, a Treasury spokeswoman referred to Mr. Paulson’s statement Wednesday that assistance to local and state governments wasn’t the purpose of the bailout funding.

“The focus … is to stabilize financial institutions and strengthen the financial system, promote lending and so on,” Mr. Paulson said then.

The Philadelphia pension system lost more than $650 million in the first nine months of the year. Last week, Mr. Nutter announced Philadelphia would be laying off city employees, cutting salaries, closing most of its swimming pools and shutting nearly a dozen library branches to cope with a $108 million shortfall this year caused by lower business and real estate tax revenue. The deficit could grow to a total of $1 billion over five years.

Phoenix’s budget deficit is at least $200 million and could reach $250 million by June if tax revenues keep sliding. The figure represents up to 22 percent of the city’s $1.2 billion general fund, which pays for most city services.

Ms. Franklin said this week that city employees in Atlanta will have their hours and pay cut by 10 percent. The cuts are being made to help the city weather an expected budget shortfall of $50 million to $60 million.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2021 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide