Job losses and budget shortfalls in cities could drag economic recovery
WASHINGTON, Jan. 13 /PRNewswire-USNewswire/ -- While the nation's economy may be approaching the late stages of the worst economic downturn since the Great Depression, local government budget tightening and spending cuts over the next several years could well impose a significant drag on the nation's economic recovery.
Cities face layoffs, canceled contracts with small businesses and vendors, reduced services, cuts in state aid, and sizable budget shortfalls for 2009 that are expected to grow much more severe and widespread from 2010 to 2012. To ensure city conditions do not slow the pace of economic recovery, the National League of Cities (NLC) board of directors at their meeting in Washington, D.C., last week called for more federal action to help cities accelerate job creation and stabilize their budgets.
The board's action came in the wake of a new NLC report projecting the municipal sector will face budget shortfalls combined with cuts in state aid to range between $56 billion and $83 billion over the next three years. Federal investment through a jobs package would help stabilize city budgets allowing cities to save and create local, public and private sector jobs. Specifically, in a jobs package, NLC is calling for the federal government to, among other actions:
- Make more investments in rebuilding America's infrastructure;
- Improve access to credit for small businesses and local governments;
- Provide targeted resources to help stabilize local government budgets.
"While Recovery Act funds are beginning to arrive in cities, without greater federal intervention cities will continue to slide and will hobble the national recovery for years to come," said NLC President Ronald O. Loveridge, mayor, Riverside, California. "We urge federal action that would create jobs. Inaction at the federal level could worsen the already difficult situation facing cities and the country."
In addition to budget shortfalls due to declining sales, income, and property tax revenue collections, the NLC report indicates municipal budget shortfalls are also increasing due to cuts in state assistance to local governments. Many cities are receiving almost no assistance from state governments, and in some cases states are recapturing that assistance to reduce their own budget gaps.
In response to continuing declining economic conditions and the prospect of budget shortfalls, cities are laying off staff, delaying or canceling infrastructure projects, and making cuts to public safety services. Together, these measures can have devastating impacts on the employment level in local communities and leave a deep and lasting impact on the national economy. Local budget cuts could result in 600,000 public and private sector job losses in 2010 and another 900,000 in 2011. One in seven cities is beginning to cut public safety services, usually only done as a last resort.
In addition to calling for short-term action to create jobs and help stabilize city budgets, the NLC Board of Directors called for federal action on key priorities for cities including:
- Authorizing a new federal surface transportation program;
- Fully funding the Energy Efficiency and Conservation Block Grant Program; and
- Continuing efforts to stabilize the housing market and strengthen neighborhoods.
The National League of Cities is the nation's oldest and largest organization devoted to strengthening and promoting cities as centers of opportunity, leadership and governance. NLC is a resource and advocate for 19,000 cities, towns and villages, representing more than 218 million Americans.
SOURCE National League of Cities