It's About Restoring Trust

Congress Fails Cities:
No economic stimulus for local governments

By John DeStefano, Jr.

[Originally published in Nation's Cities Weekly, May 26, 2003]

Congress once again failed to address the needs of local governments with a tax cut package that does not include any direct economic stimulus for cities--instead providing $ 10 billion in discretionary funds for states.

“Cities and towns provide the physical, social and civic infrastructure for healthy, prosperous communities all across the United States.”

As this newspaper went to press, House and Senate conferees ignored a 95-3-2 Senate vote to provide $ 4 billion for local governments and $ 6 billion for states as part of the economic stimulus bill, the Jobs and Growth Tax Act of 2003 (S. 1054).

Instead, states will get the entire $ 20 billion allotted in the bill--$ 10 billion for Medicaid aid and $ 10 billion in general funding.

This latest blow comes on the heels of the latest orange homeland security alert--another unfunded mandate that costs cities millions of dollars per day in law enforcement and security costs without any relief from the federal government. This is hardly a way to treat the first responders who protect the homeland.

We are dismayed that once again, Congress has overlooked the needs of cities and their important role in the economy and safety of the nation.

A National League of Cities report to be released later this week shows city revenues are declining. Spending pressures are rising. Four out of five cities report being less able to meet their financial needs than the year before. And they expect conditions to get worse next year.

As a result, essential services are suffering. Staff--including police, firefighters and teachers--are being laid off in many cities. Spending on infrastructure and other priorities is being postponed indefinitely.

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As cities go, so goes the nation.

But so far, Congress and the Administration have failed to address the needs of local economies and their impact on the national economy.

We believe that ideally an immediate stimulus package should address three areas.

First, stimulate spending among low- and moderate-income families who have been hardest hit by the economic downturn.

Second, help states to address their budget shortfalls, which are hurting local economies, critical services and ultimately quality of life. It is important to note that as states are facing more and more fiscal pressures, they are passing down more responsibilities to local governments.

And third, fuel economic growth by buttressing investments in local public infrastructure and services to meet needs that otherwise could not be met.

Providing economic stimulus of $ 4 billion to local governments. plus another $ 16 billion to states, although modest compared to the need, would have been a step in the right direction toward recognizing the essential role that cities play in the national economy. It would have helped to keep our cities and our economy strong.

NLC and the state leagues will work to get a share of the $ 10 billion Congress is allotting to states. We will also continue to aggressively lobby Congress for our fair share of federal dollars to keep cities safe and economically secure.

© Copyright 2003, The National League of Cities.