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Gephardt proposes 'new urban agenda' to foster growth.

House Majority Leader Richard Gephardt (D-Mo.) testified before Congress at a hearing with representatives of the National Governors' Association, the National Association of Counties, and NLC last Wednesday that short and long-term budgetary problems in central cities present a serious dilemma for the country and urged a federal-state-municipal effort to develop both a targeted economic strategy as well as a mandate relief effort:

"I am deeply concerned about the plight of our nation's urban areas, and I intend to propose a comprehensive legislative agenda to facilitate economic growth and combat the forces that limit the fiscal capacity of these jurisdictions. Certainly we most not leave these cities behind, as America's economy is only as strong as its weakest link."

Gephardt said he would be proposing a comprehensive legislative agenda for economic growth and municipal fiscal capacity. In response to a question from Rep. John Mica (R-Fla.), who held up a local county unfunded mandates resolution, Gephardt said he would head up efforts to force a review of current unfunded federal mandates and to erect barriers to make it harder for Congress to impose new mandates:

"If we want states and local governments to implement our policies, we need to be much more straightforward in how we are going to help pay for or deal with the costs on these levels of governments.

"Secondly, the Vice President's report, on reinventing government is an excellent starting point for us to go back ourselves and think how we in the Congress are going to cooperate with state and local governments.

"And third, I agree with Vice President Gore that we need to clear a lot of the regulatory underbrush and review existing federal laws and mandates to make them more flexible, affordable, and workable."

At the hearing of the House Government Operation Subcommittee on Intergovernmental Relations under Chairman Edolphus Towns (D-NY), Gephardt released an in-depth study of the fiscal condition of state and local governments conducted by the General Accounting Office (GAO) and told the committee:

"The fiscal condition of our state and local governments is critical to our nation's economic health. In order to continue on the road to economic recovery, we must address impediments to economic growth at the state and local level.

"The weakest cities are plagued by deterioration of the industrial base and middle-class flight to the surrounding suburbs, leaving mismatched high social spending needs and low tax bases. These cities need outside aid equal to about 36 percent of their revenue base to be able to provide only average levels of services to their residents. Without this help, these jurisdictions will be forced to levy heavy tax burdens on inner-city residents who can least afford it. To make matters worse, a number of these jurisdictions are experiencing short-term budgetary problems which constrain local officials' ability to strengthen their long-term fiscal capacity.

"This nexus of short- and long-term budgetary problems in some of our central cities presents a serious dilemma for our country. Lawmakers at all levels of government must work together to develop targeted economic development policies that will reverse this systemic trend that plagues these urban areas. Eliminating duplicative and cumbersome administrative and regulatory requirements is essential to this effort. We must be able to coordinate and direct government assistance."

GAO Report

The GAO report, "State and Local Finances," states that many cities with high poverty levels and low incomes face a fundamental, long-term problem. It says these cities have less capacity to finance their police, fire, and other services at average levels because of their relatively low tax bases and face not only a short-term problem of budget deficits but also a long-term deterioration in the level of services they can afford to provide--hence such jurisdictions may have the most difficulty in overcoming their financial problems and meeting the service needs of their residents:

"On a broad scale, the decline in state and local budget surpluses could exacerbate the federal deficits's effects on the economy, and if so, could cause reduced long term growth in the national economy. In our view, the trends and differences in state and local financial conditions argue strongly that they be made a part of the major reform deliberations now underway.

"We found that large disparities exist among states and large cities in the levels of services they can afford to finance, given average levels of taxation. This reflects differences in underlying economic factors, such as income levels and poverty rates. At the city level, these disparities have grown over the past two decades.

"In this regard, we found a significant trend affecting large cities. Over the past two decades, the poorer cities experienced a deterioration in the levels of basic services they could afford while the better-off cities improved. Residents of the poorer jurisdictions, who can least afford it, would have had to shoulder higher tax burdens than residents of better-off cities to finance city services at comparable levels. If the weakest cities had wanted to levy average tax burdens and finance services at average levels, they would have needed additional outside funds equal to an estimated 36 percent of their own tax revenues.

"Disparities at the city level are of particular concern to us for two reasons. Unless the trend is reversed, which could happen with strong economic growth in the poorer cities, residents of those cities will be left further and further behind those of better-off communities in terms of receiving services at reasonable tax burdens.

"Furthermore, the declines in budgetary surpluses at the state, county, and city levels, which have turned into deficits in some jurisdictions, are a disturbing trend. Unless reversed, it implies a decreasing flexibility at the state and local levels, at least in the short run, for undertaking major new investment programs and responding to emerging issues such as reforms to health care and welfare.

"Finally, we note that the declining state and local budgetary surpluses may add to the federal deficit's effects in impeding stronger long-term growth in the U.S. economy. To the extent that this is the case, the "budget problem" as it affects the future of the nation's economy is not simply a federal deficit problem, but rather a general governmental problem in the federal system."

NLC expressed gratitude to the Majority Leader for his efforts to seek a status report of the fiscal condition of states and local governments, noting that much of the information in the GAO reports came from NLC's annual reports on the fiscal consitions of cities.

Noting the fundamental changes since the Kerner Commission report more than quarter century ago, NLC urge continued efforts in Congress to address the underlying issues critical to the economic future of metropolitan regions and our national economy:

"We believe the fate of cities is inextricably linked with the economic competitiveness of the nation. For more than a decade the federal government had no national policy for cities. Now we must create a policy reinvest in America's economic security and restructure the economic foundation of our nation."

The Cities' Message Is Getting Through: House Members Join Mandate Relief Efforts

House Majority Leader Richard Gephardt (D-Mo.) joined bipartisan leaders in the Congress last week in telling representatives of the National Governors' Association, the National Association of Counties, and NLC last Wednesday that "we can begin, starting today, to heighten national attention to this issue of unfunded federal mandates. We can make changes in federal laws to require a more straightforward accounting to state and local leaders."

Gephardt's answer came in response to a question by Rep. Gary Condit (D-Calif.), author of NLC-supported HR 140, a bill to halt any new unfunded federal mandates.

Condit praised the Majority Leader for his willingness to take a leadership role in the Congress in the battle against mandates and announced that the Congressional Mandates Caucus, which Condit co-chairs with Rep. William Clinger (R-Pa.), now includes 67 members, both Republicans and Democrats.

Condit said the caucus members had already scheduled a two hour, special orders on the floor of the House of Representatives on October 27th, National Unfunded Mandates Day, to began educating their colleagues on the impact of unfunded federal mandates on cities and towns. The special Congressional session will be covered on national television over the cable C-Span channel. Condit said the special Congressional session was intended to compliment the efforts of elected state and local officials in cities and towns all across the country.

Condit urged Gephardt to take a lead role in insuring that any final health care or welfare reform legislation adopted by Congress not be used to shift burdens and responsibilities from the federal to the state and local level.

Rep. John Mica (R-Fla), who help up an unfunded mandates resolution passed by his county government in Florida during the hearing, said that the parade of unfunded mandates out of Washington had to come to a stop:

"If we think an issue is important enough to enact national legislation, then we ought to pay for it."

Rep. Steven Schiff (R-N.M.), a former Alberquerque city attorney, noted he was a member of the Unfunded Mandates Task Force because of his experiences as both a former city and county official who knew what it was like to be at the receiving end.
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Title Annotation:includes related article on proposed unfunded mandate relief; Representative Richard Gephardt
Author:Shafroth, Frank
Publication:Nation's Cities Weekly
Date:Oct 11, 1993
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