Death by a Million Cuts: What Cities Stand to Lose If We Go Over the Fiscal Cliff
The on again, off again threat of the fiscal cliff has put municipal governments in a decidedly awkward position. How should they prepare for legislation designed not to minimize pain, but rather to be too hurtful to ever enact? "It's hard to know what the impact of a law that gets described as shooting yourself in the head will be," says Kim Rueben, a senior policy analyst at the Urban Institute.
Even so, cities are doing their best to quantify the very tangible effects of proposed cuts in dollars and cents. Last week, Baltimore Mayor Stephanie Rawlings-Blake held a press conference with acting U.S. Secretary of Commerce Rebecca Blank, imploring Congress to do something. "It will hurt consumer confidence and hit discretionary spending in the retail and tourism sectors, two pillars of growth here in Baltimore," Rawlings-Blake said. "And that means it will hurt jobs in our economy."
Like other American cities, many of Baltimore's housing, education and anti-poverty programs are funded by federal grants. If Congress doesn't have an agreement by the end of the year, sequestration dictates an across-the-board 8.2 percent cut to those funds. Here's what that might mean for Baltimore:
HOUSING: Right now, Baltimore provides 10,500 units of public housing, a whopping 4.5 percent of the city's overall households. Under sequestration, the city will have 8.2 percent less money in its public housing capital coffers. This means deferring maintenance and much needed upgrades to units and getting rid of a dozen rental units for low income residents altogether.
Section 8, which helps low-income residents pay rent, is also at risk. In Baltimore, 131,160 households use these grants to pay their rent. With sequestration, the city would receive $12.5 million less, putting the vouches of 1,080 low-income households at risk.
Even Homeless Assistance Grants would be impacted. Right now, the city expects $23 million from the feds. With the cut shelters would close, particularly those for single men without children. "Permanent supportive housing" for the long-term homeless would be shuttered, pushing hundreds of families back into the overtaxed emergency shelter system. And special programs for people with disabilities would be cut.
EDUCATION: Baltimore relies on federal funding for much of its education budget -- $56 million a year in total. Though the city has not figured out exactly what would happen if sequestration passes, officials say early education programs will likely be shuttered. The city also says sequestration could lead to $1.5 million less in Community Development Block Grants. That means few job trainings and less recreational activities for low-income youth.
POVERTY: Like other cities, Baltimore funds its anti-poverty measures largely through the Community Services Block Grant program. CSBG funds help the poor pay their electricity bills; they pay for financial literacy workshops and employment trainings; and even help low income residents file their tax returns. With the proposed cuts, Baltimore would have to fire 60 employees who help run these programs. The city would close also close six community support centers.
The city would cut back on its meals on wheels program for seniors. Every day, 330 few seniors will receive a meal.
INFRASTRUCTURE: This is where things really get hairy. A lot of the city's major transportation projects are wholly reliant on federal funding. Take, for example, the plan to upgrade the tunnels that lead to the city's main train station. The tunnels haven't had a facelift in a century; the tracks are so old and rickety that trains slow 10 mph when approaching Baltimore. If the sequestration cuts were made permanent, the $600 million project to update the the tunnels would be put on ice.
OTHER STUFF: The thing that makes all of this so troubling is that direct federal funds make up only a fraction of a city's budget. Much more money comes from state governments. Maryland, for example, stands to lose $100 million if the government goes over the fiscal cliff.
And without clarity on just how the federal government will try to plug up its debt, states are struggling to create a road map for their own infrastructure efforts. Maryland, for example, is considering raising its state gas tax to pay for a major highway and transportation overhaul. The proposal would help fund a new metro line in the Baltimore suburbs; a new bus depot for the city; and additional roads easing congestion in and out of Baltimore's port areas.
But that plan is on hold. According to the Associated Press:
Democratic Gov. Martin O’Malley pushed unsuccessfully last year for a gas tax increase, and officials are keeping an eye on the possibility that Washington could raise the federal gas tax to help address the cliff. If the federal gas tax were raised, it would make it harder to go forward with a gas tax increase in Maryland.
Even in the fiscal cliff doesn't comes to pass, all this uncertainty will likely have a long-term impact. "Cities and metros are getting the picture that the federal government is not a reliable partner," says Bruce Katz, vice president at the Brookings Institution and founding Director of the Brookings Metropolitan Policy Program. "The federal government is supposed to provide a safety net. But the U.S. is operating with a federal government that doesn't have clear vision."