Cities brace for bad news in Obama's next federal budget, top mayor says

Los Angeles Mayor Antonio Villaraigosa, president of the US Conference of Mayors, says “bad news is coming” for the nation’s cities in the federal budget the Obama administration is preparing to release in early February.

“Anybody who saw the [budget] deal last summer and then the failure of the super committee … knew that there were going to be serious and draconian cuts,” Mayor Villaraigosa said at a breakfast for reporters hosted by the Monitor.

As part of an August deal to raise the debt ceiling, the president and Republican leaders in Congress agreed to a $1 trillion spending cap. The concern is that, to meet that obligation, the federal government will pull back from programs that help cities, such as community block grants or assistance to help pay for fire and police personnel. 

Moreover, cuts in other ares could hurt cities, too. If the federal government curtails welfare programs or spending on housing for the homeless the problems won't disappear – it's just that cities will have to increasingly pick up the tab, mayors say.  

Gene Sperling, director of the White House's National Economic Council, has been meeting with Obama administration allies to warn them about the stringent outlines of the president's 2013 budget, the Hill newspaper reported.

Mayors gathered here for their winter meeting will “put pressure and put a light on a Congress that has been an abysmal failure” on job creation, Villaraigosa said.  A key goal is to get Congress to pass a long-term transportation bill to help cities fund rapid-transit projects.

The economic outlook for the nation’s 363 metropolitan areas varies widely.

The good news is that all but three of the nation’s metro areas will see a gain in employment in 2012, according to a new report prepared for the Conference of Mayors by the IHS Global Insight forecasting firm. But only 26 areas have already regained the jobs lost in the recession and only another 26 will recover all their lost jobs in 2012, IHS said.

“Most of our cities will be struggling with their economies for another five years,“ Villaraigosa said.  “In other words it will take about five years for many of our cities to regain the jobs that were lost before this recession.”

Slower government spending will play a role in the long recovery time. The IHS report predicts that federal, state, and local spending will decline by 2.5 percent in 2012, leading to reductions in wages and salaries.