Cities Cut While Hoping for Government Aid

On cities' chopping blocks: libraries, police officers, firefighters.

ByALICE GOMSTYN and KATE BARRETT
November 14, 2008, 8:46 PM

Nov. 17, 2008 — -- What does a cash-strapped American city look like?

Think fewer libraries, fewer public works projects, fewer after-school programs, fewer police officers and fewer public employees overall.

Thanks to the whimpering economy, some city officials say such reductions will match their significantly smaller budgets. But they're also hoping the federal government will be able to ease at least some of the pain.

"What we're saying is these are some ways that you can help us so we can help shore up the economy at the local level," said Atlanta Mayor Shirley Franklin. "It's a win-win."

A host of city leaders have made their case to federal officials recently.

Franklin joined Philadelphia Mayor Michael Nutter and Phoenix Mayor Phil Gordon last week in signing a letter asking U.S. Treasury Secretary Henry Paulson for help. They want new aid for cities in the form of loans to help them operate their pension plans and address other costs as well as the allocation of $50 billion from the government's $700 billion bailout plan to be used for infrastructure projects.

Separately, the Detroit City Council passed a resolution last week pushing for a $10 billion bailout for the city. Detroit Mayor Ken Cockrel Jr. will be in the nation's capital this week to push for money from a second stimulus package.

The U.S. Conference of Mayors, meanwhile, approached Congress a couple of weeks ago. The conference called for $89 billion over a 12- or 14-month period to use for deferred building projects.

"We have had incredible joblessness that's gotten worse," said Tom Cochran, the CEO and executive director of the U.S. Conference of Mayors. "Mayors are responding that they can effectively utilize these funds to put people back to work."

While the request from Atlanta, Philadelphia and Phoenix's mayors is distinct from that of the conference's proposal -- U.S.C.M. said it does not want to use money from the $700 bailout package –- Gordon said that their plan is also about jobs.

A number of Phoenix projects, from an airport runway extension to a water treatment plant, have been stalled for lack of funding. If the government provided money for those projects, he said, they could be up and running quickly and would provide jobs for hundreds, maybe thousands, of local residents.

For now, however, Gordon said city officials are bracing for possible cuts in everything from after-school programs to sanitation.

"I think every day we wait, the crisis gets worse and worse," Gordon said, "especially when cities are able to put people to work today."

If federal officials decide to provide more aid to local governments, there are different opinions about the best way to do it.

Mark Zandi, the chief economist and co-founder of Moody's Economy.com, said that the most efficient way for the government to deliver help would be by distributing aid to the states first -- governors, like California's Arnold Schwarzenegger and New York's David Patterson have already called for federal support -- and relying on them to use existing formulas and mechanisms to provide funds to cities and towns.

It would be more effective, he said, than providing funding directly to municipalities.

"The states have got that infrastructure set up," he said. "To ask the fed[eral] government to do it would be extraordinarily costly and too complex. It just wouldn't get done."

But Pat Hagan, the national audit partner for state and local government at Deloitte and Touche LLP, said that providing help to municipalities through existing federal programs -- such as low-income housing and social services programs -- could also prove successful.

"That's probably an easier route" than creating a new program, he said.

Philadelphia Budget Director Stephen Agostini said that, for now, the city is preparing its budget with the assumption that the assistance won't come through. To help close a $108 million budget gap for the current fiscal year -- which ends this June -- Philadelphia is preparing to close 11 libraries and seven fire companies. It also lay off some 200 city worker and will not fill 200 vacant police officer positions.

"We have to have a balanced budget," Agostini said.

Other cities are making similar cuts. Here is a breakdown of recent and proposed cuts in eight cities, courtesy of the U.S. Conference of Mayors:

Trenton, N.J.

New York

Chicago

Oakland, Calif.

Atlanta

Seattle

Washington, D.C.

Sacramento, Calif.

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