Three big-city mayors appeal for bailout cash

/ Source: The Associated Press

Adding to the chorus of pleas for financial help, three big-city mayors asked the federal government Friday to use a portion of the $700 billion financial bailout to assist struggling cities.

They sought help with the pension costs, infrastructure investment and cash-flow problems stemming from the global financial crisis.

Mayors Michael Nutter of Philadelphia, Shirley Franklin of Atlanta and Phil Gordon of Phoenix made their request in a letter to Treasury Secretary Henry Paulson.

Nutter said cities are facing an economic crisis not seen since the Depression and need help just like financial institutions.

"I want to make sure that cities and metro areas are at the table, that their voices are being heard, that our challenges and problems are well understood, so that we can get relief," Nutter said.

President-elect Barack Obama has also called for some sort of aid to state and local governments so they don't have to raise taxes or lay off workers while the federal government is trying to revive the economy, but he hasn't proposed or endorsed a specific aid plan.

Survey showed needs countrywide
The cities' appeals echo the needs expressed in a recent informal survey of U.S. mayors by

Many of the 205 mayors who responded called for a program in the style of President Franklin D. Roosevelt's Works Progress Administration to put people back to work and rebuild neglected roads, bridges and schools. The economy was by far the most frequently mentioned problem, and fixing the nation's infrastructure the most frequently mentioned solution.

On Wednesday, Detroit's City Council passed a resolution calling for the federal government to provide $10 billion to the city. That followed a move by mayors of several Detroit suburbs near auto factories who also sought bailout money.

In Friday's letter, the three mayors proposed providing loans to help cities pay pension costs. They also want $50 billion in loans for investment in infrastructure, and additional one-year loans to cities unable to borrow cash because of the tight credit markets.

Nutter said he met with Phillip Swagel, the Treasury Department's assistant secretary for economic policy. He said Swagel "completely understood that we have major problems, in big and small and medium-size cities all across America and they want to be helpful. It's just a matter of figuring out what's the best way to do it and what works best."

Treasury unlikely to oblige
Asked about the request, a Treasury spokeswoman referred to Paulson's statement Wednesday that assistance to local and state governments wasn't the purpose of the bailout funding.

"The focus ... is to stabilize financial institutions and strengthen the financial system, promote lending and so on," Paulson said then.

The Philadelphia pension system lost more than $650 million in the first nine months of the year. Last week, Nutter announced the city would be laying off employees, cutting salaries, closing most of its swimming pools and shutting nearly a dozen library branches to cope with a $108 million shortfall this year caused by lower business and real estate tax revenue. The deficit could grow to a total of $1 billion over five years.

Phoenix's budget deficit is at least $200 million and could reach $250 million by June if tax revenues keep sliding. The figure represents up to 22 percent of the city's $1.2 billion general fund, which pays for most city services.

Franklin said this week that city employees in Atlanta will have their weekly hours and pay cut by 10 percent. The cuts are being made to help the city weather an expected budget shortfall of $50 million to $60 million.