A New York Times editorial on Sunday pretty much nailed the dilemma facing cities and states as the federal government cuts back spending. First excerpt:
States and cities had already endured a harrowing three-year financial slide when the debt-ceiling crisis darkened their outlooks even further. In the space of just a few weeks, the Republican-led standoff on spending and taxes brought them a triple dose of bad news: a budget deal that will probably lead to a significant reduction in federal aid; a bond downgrade that could eventually trickle down to the local and state level, making borrowing more expensive; and a stock market plunge that is bleeding state employee pension funds.
Washington should have been trying to find a way to help states avoid the layoffs and cutbacks that have contributed heavily to the high unemployment rate. Instead, it seems to be doing everything possible to make the situation worse in state capitals around the country.
A little later, this:
The [debt-ceiling deal] will cut $917 billion out of domestic discretionary programs, about 60 percent of which will come from nondefense spending. That will inevitably reduce transportation, education and environmental aid sent to the states.
The Republicans who produced this artificial crisis, and are responsible for its effects, say they would like nothing more than to see a reduction in state as well as federal spending. That is where government hits closest to home, affecting the size of classrooms, the bulbs in streetlights, the asphalt in potholes, and the lines in emergency rooms.
It’s one thing, of course, to lose federal aid. It’s another to lose the ability to borrow through bonds — something that local governments do universally in order to build big capital projects. Metro, of course, is planning on selling bonds to help pay for some new transit projects, with the money to be paid back by Measure R revenues.
How this plays out remains to be seen. As we’ve said before, the majority of Americans live in large cities. I’ll post another media story later this morning along the same lines and dealing more with transportation spending, or the lack thereof.
Categories: Policy & Funding