Cities Now Facing Severe Budget Cuts, AFSCME Calls for Federal Leaders To Increase Local Aid

WASHINGTON — The American Federation of State, County and Municipal Employees (AFSCME), AFL-CIO, is calling on congressional leaders to increase federal aid to cities strapped for cash.

The Economic Policy Institute (EPI) today released a study, "U.S. Cities Face Fiscal Crunch: Federal and state policies exacerbate local governments' budget shortfalls," which looked at a sampling of cities that have begun experiencing or projecting budget shortfalls for 2002 and 2003. AFSCME leaders met in February to discuss the states' fiscal crises and the situation has worsened considerably since then.

"Many local governments were already suffering from the spring 2001 economic downturn, and after the disaster of September 11th they had an additional $2 billion in extra security costs. The financial crisis is hitting cities of all sizes, from New York's $6 billion budget shortfall to Gresham, Oregon's 11 percent budget gap of $2.1 million," AFSCME President Gerald W. McEntee said.

According to EPI economist Max Sawicky, actions by the federal government are actually making it worse for the cities:

Rising state obligations, such as increases in Medicaid recipients, will make it harder for states to meet their obligations to localities.
Cuts in federal income and estate taxes will shrink state revenues further. The repeal of the federal estate tax alone is expected to cost the states $9 million annually in lost income.
The President's proposal to cut federal law enforcement funding by 26 percent will reduce revenues for localities. At the same time, the proposed $3.5 billion for "first responders," such as police, fire and emergency medical technicians would go primarily to the states, not to the localities that employ these personnel.

"It's time for our leaders in Washington to quit passing the buck and help out the cities where our hard-working families live and where it will directly benefit public safety and services," McEntee said.

The report may be downloaded at the EPI website.

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American Federation of State, County
and Municipal Employees, AFL-CIO
1625 L Street, N.W. Washington, D.C. 20036-5687
Telephone (202) 429-1145
Fax (202) 429-1120

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