COMMUNITY AND ECONOMIC DEVELOPMENTPOLICY AND ADVOCACY COMMITTEE

Congress of Cities Conference and ExpositionNovember 9, 2011

Phoenix, AZ

NLC Federal Legislative Update

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City Fiscal Conditions in 2011

The nation’s city finance officers report that city fiscal conditions continue to weaken for fifth straight yearin 2011 due to:• National economic recession• Struggling real estate markets• Cuts in state aid and transfers• Slowed consumer spending• Underfunded pension and health care liabilities• High levels of unemployment

Local Economic Climate

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Federal Economic Impact

•The biggest question for cities lies in the uncertainty about the health of the national economy, which is driven by a collection of city-regional economies

•If regional housing markets, unemployment, and consumer confidence struggle, city revenues will continue to lag, city leaders will face more cuts, and those decisions will act as a drag on the national economy.

- NLC City Fiscal Conditions Report, 2011

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State Economic Impact

• Since 2009, cities report cuts from states in general aid (50%), shared revenues (49%), and reductions in reimbursements and other transfers (32%).

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Local Response Leading Federal Policy

• Real estate markets will continue to struggle through 2012 and 2013;

• Consumer spending, unemployment, and wages slow to recover;

• Large state shortfalls mean more state cuts;

• Pension and health care costs management squeeze out other services;

• Personnel cuts will continue• Ending balances will continue to

decline.

•Shared services – interlocal agreements –regionalization and cost-sharing;

•Participatory budgeting and citizen engagement to reset/reevaluate priorities;

•Redefinition of “core services;”

•Outsourcing, privatization and “managed competition;” and,

•New partnerships and volunteerism.

Local Response Federal Policy

Federal Fiscal Realities

The Budget Control Act (the Debt Deal)

The Super Committee

The American Jobs Act

Federal Appropriations

Transportation Reauthorization

Advocacy Strategy

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The Issues

Federal Fiscal Realities

If the Committee or Congress fails, $1.2 trillion in automatic spending cuts will be imposed on defense and non-defense FY 2013 discretionary spending.

Since 2001, the federal debt has increased dramatically, rising from 33 percent of GDP to 62 percent of GDP in 2010 due to two wars and the country’s fiscal policies, along with the recession.

In the short term, economic recovery will improve the deficit situation.

In the long-term, even after the economy recovers, federal spending is projected to increase faster than revenues due to structural imbalances and rising health care costs.  The Budget Control Act (debt deal) will help address the problem in the short term but additional debt reduction measures are required to bring the budget into balance. 

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Federal Spending

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Budget Control Act

Cut discretionary spending by nearly $1 trillion over ten years, enforced by annual spending caps.

Created a bipartisan Super Committee tasked with finding at least $1.5 trillion more in deficit reduction by November 23 that must be voted upon by Congress by December 23.

If the Committee or Congress fails, $1.2 trillion in automatic spending cuts will be imposed on defense and non-defense FY 2013 discretionary spending.

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The Super Committee

Use a balanced approach = revenue enhancements + spending cuts + investments in cities

Do no harm to harm to tax exempt municipal bond financing. Transparency in the process with opportunities for input.

Don’t transfer unfunded mandates to local governments.

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American Jobs Act

Tax relief for both workers and businesses; Resources to creating jobs while rebuilding and modernizing the country’s infrastructure; Assistance for the unemployed and providing pathways back to work; and Offsets to pay for its provisions.

Appropriations

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• Minibuses• Election year politics• Need to demonstrate ability to govern• Unknown constituencies

THUD Appropriations

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SENATE

CDBG $2.85 B$485 million below the House and the lowest amount since 1990

HOME $1 B

Sustainable Communities$90 M

Choice Neighborhoods $120 M

Housing Counseling $125 M

TIGER Grants $ 550 M$120 M for small/rural communities

HOUSE

CDBG $ 3.5 B

HOME $1.2 B

Sustainable Communities $0

Choice Neighborhoods $0

Housing Counseling $0

TIGER Grants $0

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Contact

Michael Wallace

Program Director,

Federal Relations

National League of Cities

202.626.3025

wallace@nlc.org