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NLC, Brookings Co-Host Forum on City Fiscal Conditions
by Lara Malakoff
 A forum co-hosted by NLC and the Brookings Metropolitan Policy Program last week examined the fiscal challenges in cites and how local governments and the national economy can recover.
Fiscal Challenges Facing Cities: Implications for Economic Recovery featured mayors and policy experts and highlighted current and projected trends in fiscal conditions and offered ideas for policies the federal government can pursue to boost economic recovery at the local level.
The nation’s economy may be approaching the late stages of the fiscal downturn, but the economic effect on cities continues to progress. The local impact of economic shifts typically plays out over several years, leaving cities in the depths of economic challenges for some time to come.
“The low point for cities typically comes 18 to 24 months after the low point for the recession,” said Chris Hoene, director, Center for Research and Innovation at NLC during the forum. “And that’s important because if we’ve just passed the low point, we have a while to go for cities.”
Since the onset of the economic downturn, local leaders have been forced to make tough choices in an effort to meet their cities’ fiscal needs and close budget gaps. Local leaders will continue to make these tough spending decisions throughout the nation’s gradual recovery.
Hoene and Steve Cochrane, managing director, Moody’s Economy.com, provided a context for the fiscal outlook, both national and local.
As cities continue to experience slowed consumer spending, rising unemployment, depressed housing values and restrictive credit markets, fiscal decisions and opportunities at the local level matter a great deal in the context of national economic performance and recovery.
Both presenters reinforced the need for increased economic activity at the local level as the first round of federal stimulus funds trails off and the importance of restoring intergovernmental partnerships when focusing recovery efforts.
NLC Executive Director, Donald J. Borut emphasized this intergovernmental relationship when he noted that, “The federal economy is the sum of its metropolitan and regional economies.”
Jared Bernstein, chief economist and economic advisor to Vice President Joe Biden, offered a federal perspective during the forum. He recognized the ongoing effect of the economic crisis on local governments and the need for continued federal funds to stimulate local economies.
“Those of us on the economic team have marching orders from the President to put all good ideas on the table,” he said.
Bernstein’s presence provided support for an ongoing relationship between local and federal governments to ensure that cities will have the resources they need to climb out of the latest economic crisis.
Mayors Discuss Fiscal Challenges
A panel of mayors, including Michael Nutter of Philadelphia; Chuck Reed of San Jose, Calif.; Scott Smith of Mesa, Ariz.; and Elaine Walker of Bowling Green, Ky., moderated by “The Wall Street Journal” economics editor David Wessel, also convened to provide current and local perspectives on city fiscal recovery.
The mayors, who represent cities that vary in terms of size, geography and type of tax revenue, agreed with one another that the nation’s latest economic crisis has driven local leaders to seek alternate ways of approaching fiscal decisions.
The four mayors, along with city leaders across the country, are:
• Learning to do more with less money;
• Initiating changes in how services are delivered and the level of services provided;
• Fighting to keep jobs local, in both the public and private sectors;
• Partnering with the private sector for infrastructure projects; and
• Receiving federal funding slowly, as it trickles down through the states.
According to Mayor Nutter, “Cities are too important to fail,” so addressing these challenges is crucial. “If you invest in cities and see what they do, you can turn the economy around.”
In dealing with these challenges, the mayors addressed the role of the federal government in stimulating local economic recovery. While they indicated that they do not seek direct checks from the federal government, their discussion produced a variety of federal funding recommendations, including:
• Enhancing capital markets so that private sector investment continues and municipal credit is accessible;
• Creating long-term, private sector jobs and green jobs training programs;
• Encouraging the development of small businesses through programs such as the Department of Energy Loan Guarantee Program;
• Stimulating community development through federal block grant programs such as the Community Development Block Grant and energy block grants; and
• Supporting metropolitan area cooperative agreements, which utilize recovery funds at a regional level.
Immediately following the forum, representatives from NLC and Brookings Metropolitan Policy Program, along with Mayors Reed, Smith, Walker, and Mayor John Hickenlooper of Denver, met with federal administration officials to further share their perspectives on the state of city fiscal conditions, the range of actions mayors are undertaking and propose to undertake in response, and the implications for national economic recovery.
A webcast of the November 19 forum can be viewed on NLCTV.
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