The Budget Game and the Stakes for Cities

The Budget Game and the Stakes for Cities

Sen. Tom Harkin found that a sequester by Congress would cut tens of millions of federal dollars for state programs. Credit: Flickr user thisisbossi

Why should the average Philadelphian care about the ongoing food fight over the federal budget in Washington, D.C? Because underneath the smack-down language is a serious debate about what kind of government the country will have, and whether cities will end up strengthened or weakened as a result.

The focus of the current debate is the so-called “fiscal cliff” that Congress put in place last winter, when Democrats and Republicans could not agree on a long-term budget that would reduce the national debt. So they passed a budget that requires extreme cuts and tax increases, known as the “sequester.”

But here’s the twist: Congress never intended to actually implement the sequester. It’s sort of like a poison pill — it was created to force Congress to come up with alternatives. In fact, the Congressional Budget Office recently warned that if the “fiscal cliff” is not averted, the nation will likely plunge back into a recession next year.

In July, Sen. Tom Harkin (D-Iowa) did his own analysis of the impact of the sequester on each state. According to Harkin, if the sequester were actually implemented, here are a few ways it would affect Pennsylvania:

  • $ 20,248,000 cut from Head Start — 689 jobs lost and 3,305 fewer children served
  • $ 43,166,671 cut in Title I education funding for low-income schools — 594 education jobs lost and 136 fewer schools receiving funds
  • $ 2,623,074 cut in job training funds for dislocated workers, with 1,522 fewer dislocated workers served

The City of Philadelphia recently completed another analysis of the sequester’s impact and concluded that, if implemented, it could adversely affect the city in many areas, including education, health, housing and job training. Here are some examples of potential cuts that the city would have to make:

  • The Foreclosure Prevention Housing Counseling Program would assist 80 fewer homeowners, potentially increasing the burden on the City’s homeless assistance system by $1.6 million.
  • The City would clean and maintain 44 fewer vacant lots.
  • Cuts to the Breast and Cervical Cancer Screening Program would result in 69 fewer women receiving cancer screenings and related services.
  • The City would clean 100 fewer homes for lead, reducing services to approximately 300 lead-poisoned children.
  • Cuts to the summer jobs program would result in 89 fewer summer employment opportunities for young people.
  • Operating hours in six older adult centers would be reduced.

These cuts come on top of three years of cuts to cities, which have been caused by the recession and federal budget chopping. In fact, many economists now believe that state and local budget cuts are currently holding back the economy — more than even the private sector.

So what is the alternative? A growing chorus of public officials, including mayors, believes that Congress has to adopt a more balanced approach, which includes adding new revenues as part of the budget package. This could include closing loopholes through tax reform or finding new sources of revenue. Every major bipartisan deficit reduction plan (such as the Simpson-Bowles plan) has included substantial new revenues as necessary to balance the federal budget.

In June, the U.S. Conference of Mayors released a resolution stating, “Last year’s debt ceiling agreement includes a draconian, indiscriminate, and arbitrary budget sequestration that would devastate both domestic investment and national defense programs.”

The Ryan budget would include about three times as many cuts to non-defense discretionary programs as the sequester. Credit: CBPP

The defense industry recently mounted a public campaign to prevent further defense cuts and to push back on some of the defense cuts in the sequester. But more non-defense cuts would be even worse for cities.

An analysis by the Center for Budget Policies and Priorities concluded that a proposal by Republican vice presidential nominee Paul Ryan, which would continue tax cuts for Americans making more than $250,000, would also force states and localities to either reduce the quality and extent of their “basic public systems” — schools, clean water facilities and law enforcement — or to raise local taxes to make up the additional cuts. This is a huge cost shift from the federal government to cities.

This Thursday, Philadelphia Mayor Michael Nutter and other mayors from across the country will convene in Washington to ask Congress to resolve the budget impasse in a way that does not hurt cities.

Congress is expected to adjourn before the end of September until the election, and most observers believe that the sequester will not be addressed until after November. In order to avert a crisis in cities across the country, Congress will have to act by the end of the year.

Terry Gillen is director of federal affairs for Mayor Michael Nutter’s office in Philadelphia.

Tags: infrastructurephiladelphiawashington, d.c.governancemayorsbudgetsmichael nutterpaul ryan

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