As Fiscal Cliff Approaches, Mayors Warn of the Toll on Cities

The fiscal cliff would be a bear for all Americans, but it would devastate U.S. cities

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Jacquelyn Martin / AP

Philadelphia Mayor Michael Nutter speaks to the media outside of the White House, in Washington, after Vice President Joe Biden met with mayors from cities across the U.S. on Nov. 15, 2012

The so-called fiscal cliff looming on Jan. 1 will increase taxes on just about all Americans and hamper an array of federal programs. But its effect will be particularly crippling for American cities. The U.S. Conference of Mayors, a bipartisan group of 1,296 mayors who represent cities with populations above 30,000, recently called the sequestration process “perhaps the biggest threat to our metro economies.”

Which is why a clutch of mayors went to Capitol Hill last week to plead their case to Congress, in hopes of reminding lawmakers of the damage the sequestration process will wreak on municipal economies. According to the group, American cities house 84% of the nation’s population. They also provide 86% of its jobs and account for 90% of its GDP. “Cities and metro areas are the economic engines,” says Michael Nutter, the mayor of Philadelphia and president of the Conference of Mayors. “We are the economy of the United States of America.”

R.T. Rybak, the Democratic mayor of Minneapolis, says Congress doesn’t recognize the local impact of sequestration. In Minneapolis, the process will result in cuts to crucial social programs like domestic-abuse prevention and immunizations for children, Rybak says — which, in turn, will lead to higher costs for police and hospitals. “Too often,” he says, “a line-item cut in Washington one year will lead to an expense in a city the years after.”

(MORE: Viewpoint: We Should Go over the Fiscal Cliff)

Scott Smith, the Republican mayor of Mesa, Ariz., is worried how to keep municipal bonds tax-exempt. If that is eliminated, he says, it will raise the city’s borrowing costs for investments and curtail its ability to carry out crucial projects. “It not only hurts quality of service, but also is a job killer,” Smith says.

The across-the-board cuts mandated by the sequestration agreement pose a challenge for mayors and locals, who are forced to prioritize essential services. “What the federal government seems to be saying is, Everyone needs to get a haircut, without any sense of what the national priorities are, or any sense of whether you can treat these investments as equal, either in their impact in the short term or in the long term,” says Bruce Katz, the director of the Metropolitan Policy Program at the Brookings Institution.

According to Katz, the most immediate priority will be navigating a looming $325 million cut to the Department of Housing and Urban Development’s public-housing fund. The National Low Income Housing Coalition reports that more than 140,000 families, including those that are elderly and disabled, would have difficulty maintaining their homes after the sequester. But even less pressing cuts will exert a significant long-term impact. For example, a $463 million cut to the $5.6 billion National Science Foundation program would, over time, “undermine the ability of the country to compete globally,” Katz says. Cuts to the program would disproportionally impact cities, which tend to house research-and-development centers.

(VIDEO: TIME Explains: The Fiscal Cliff)

To address these and other concerns, the contingent of mayors met last week in the Roosevelt Room of the White House with Vice President Joe Biden, and on Capitol Hill with House minority leader Nancy Pelosi and Senate majority leader Harry Reid. They also reached out to top Congressional Republicans, but were unable to arrange a meeting. Neither House Speaker John Boehner’s nor Senate minority leader Mitch McConnell’s offices responded to a request for comment from TIME.

Like members of Congress, the mayors are clear about the problems the fiscal cliff will create, but short on answers. Smith, the Republican mayor from Mesa, says that “we need to find sources of new revenue,” which Congressional Republicans have acknowledged. Democratic mayors Nutter and Rybak asked for a “balanced approach” to deficit reduction, but didn’t say what programs they would be willing to cut.

One place where Republicans and Democrats could find new revenue is from a cap on itemized deductions. Katz, who worked for the Clinton Administration, believes that Mitt Romney’s suggestion for a cap on mortgage interest and charitable contributions was “one of the most sensible proposals put forth in the entire campaign,” and could be used to fund long-term research and development investments. Last week Senator Kent Conrad, chairman of the Senate Budget Committee and a North Dakota Democrat, said the deductions cap has “renewed interest.”

Whether or not such a proposal is part of the solution, it’s clear that Congress must find a way to avert a disaster that would devastate U.S. cities. Going over the fiscal cliff, Katz says, would be “the antithesis of governing.”

MORE: Business Leaders Dive into the Fiscal-Cliff Debate

15 comments
RoyAustinSmith
RoyAustinSmith

if the cities are worried, get off their butts and try to do something. maybe evern put the democrats to comprise. four years of demos and no results but spending and giving away in one year, more than any other president in history.

KentR
KentR

Nows the time for the gang to get together and have a few fund raisers  to pay the national debt  its also time to  trim the budgets of any part of government  that is spinning its wheels.  No more office parties and  Close the lunch room put congress on MRE  diet  or if they are on a restrictive diet  bring lunch from home at their desks drop any office personnel as well as the costs of them beyond one appointment secretary  and disallow any work done by outsourced income "volunteers " paid for by lobby funding of any kind.  If  an office holder cant type or computer process his own bills then he needs to pay to be retrained to do so  or quit  till he has that training  since hes not qualified to serve.  this should eliminate  bills that are more than 50 pages of rules regulations  to a more commonsense  readable text.   

JimStarowicz
JimStarowicz

We already went over the 'fiscal cliff', Nationally, a long time ago,like some twelve years plus, when the congresses then started rubberstamping everything that executive branch wanted Before 9/11, treasurywas gone deficits started growing then rapidly grew, then came the fullbore rubber stamping as to two more wars of choice, abandoning the mainmissions of why we sent our military into that region with the loudcheering starting with the first drum beat pointed at Iraq! All costs,but those as to the decades needs as to the results of war, were rubberstamped, off the books till '08 and a new executive administration, nobid contracts that many argued were just great and All borrowed as theystill are Including the decades of costs as to the results of for theVeterans of as well, and came tax cuts for All but Huge cuts for thealready wealthy, as the huge amounts, huge profits to be made, as tothat homeland security as the National Security was destroyed with therapid growth of hatreds from our terror, 'In Our Names', on others.We're now trying to clime out of the huge valley we fell into ontoanother shelf with another cliff to no shelf below, as those who sent usover are fighting to maintain, not pay back what's already been lostand throw us over that and into the abyss of no return and the same thatfully supported what went on back when are once again walking inlockstep as they obey those who think for them order them to!!

notsacredh
notsacredh

President Obama may need to appoint a skilled hostage negotiator to talk to the Tea Party house republicans. They've always put their loyalty to party above their loyalty to the country. The cities gave Obama a second term. The Tea Party might be looking for revenge.

gumOnShoe
gumOnShoe

Very serious people are Keynesian after all. LAUGH OUT LOUD.

notsacredh
notsacredh

Bobell, ever hear of the seven deadly sins? It's a "to do" list.

bobell
bobell

I guess Joshua Bell will have to wait until next year.

bobell
bobell

How can I repent when I haven't pented yet?

DonQuixotic
DonQuixotic

@sacredh 

They've been looking for revenge for the past four years from the day he came into office - partially for reasons unrelated to his Presidential policies.

bobell
bobell

Actually, the mayors seem less concerned about economic stimulus than simply taking care of their constituents.  But there is an intimate connection between services and stimulus.  If you want more policing, hire more policemen. If you want people to eat, give them a way to spend on food (SNAP, formerly food stamps).  If class size in your schools is so large it impairs instruction, hire more teachers.  If traffic snarls reduce worker productivity, spend on road improvements.

The private sector is very good at many things, but so is government at others.  We lready know some. Such as that it's much more efficient, economical, and good for the health of the population to have the government ensure that everyone has access to  health care. Such as that the private sector, with some prodding and aid from government, is best at producing safe, high-performing cars at reasonable prices.

A true grand bargain would start with a study of which sector is better at each of the essential tasks of our economy and allocate them accordingly.  Don't hold your breath.

MrObvious
MrObvious

@bobell 

That's not how we operate; half the country live gets something from government but hates it and think it's their rugged individualism that makes it possible for their local community to function.