States and cities fear the crush of the "fiscal cliff"
With the federal government staring at the potential of deep budget cuts in the new year, states and cities are likely to feel a large amount of pain as federal funding is a significant part of their revenue. Those cuts, if they're not averted, are going to directly - and quickly - impact millions of Americans.
"The impact would be dramatic," Chris Coleman, the Democratic mayor of St. Paul, Minn., told CBSNews.com.
The budget cuts, also known as the sequester, are one component of the "fiscal cliff" and would carve $1.2 trillion out of the federal budget over the next ten years. It was the result of an agreement between President Obama and congressional leaders and was meant to be so hard to stomach that Congress would come up with an alternate plan to reduce the deficit. So far, they haven't.
Just weeks before the cuts are to go into effect, mayors and governors are increasing the pressure on Congress and the president to reach a deal that would prevent the deep cuts.
The National League of Cities, which represents 1,900 mayors from across the country, recently wrote a letter to congressional leaders pleading with them to stave off the cuts, which they say would be "devastating." A dozen mayors met with Vice President Joe Biden today ensuring their concerns are heard.
"We have a very concerted effort to put pressure on Congress to come to an agreement that doesn't balance this on the backs of cities," Coleman said. "We are urging Congress and joining with cities to say, 'do your job; make the tough choices.'"
Starting in January, the cuts would reduce defense spending by 10 percent for the year, or $54.7 billion. Non-defense programs would be cut by the same amount, which would reduce discretionary spending by about eight percent, according to a recent report by the Office of Management and Budget. Since the cuts are not targeted to specific programs, all programs would receive equal treatment. That leaves local officials worried.
In other words, public safety and police officer funding would be slashed. Cities would also see a reduction in job training programs, community revitalization programs and disaster relief, youth summer jobs programs and more.
To accommodate cuts, local officials can take from elsewhere in their local budgets to fill in the gaps, but in a weak economy with reduced revenue from property taxes, sales tax and other means to raise money, officials warn that is not a practical option.
"Programs would be significantly reduced or eliminated," Coleman said.
"[C]ities will not be able to compensate for the shortfalls in these programs," Ted Ellis, mayor of Bluffton, Ind., wrote in the National League of Cities letter to Congressional leaders. He said that would lead "further cut backs in important programs and services, including those that drive economic growth in our communities."
State officials are facing a similar predicament. States face federal mandates and many of their state constitutions require a balanced budget. States can become stuck in a catch-22.
"States would face a greater challenge to figure out if they can back fill [or] do they want to forgo participation in some of the programs," David Adkins, executive director of The Council of State Governments told CBSNews.com.
About one-third of state funding comes from the federal government and 18 percent of states' grant dollars are federally funded, according a new report released by Pew Center for the States.
While Medicare and transportation are excluded from the sequester, a cut to education funding is likely to be a monumental challenge for states, and programs for low-income children would be impacted the most. Education is set to be reduced by more than $2 billion dollars, nearly 10 percent of the total funds states receive, according to a previous Pew report from September, and much of it will impact early education and special education programs.
As states have been tightening their education budgets in recent years do to a decrease in revenue coming in, many states would have a difficult time making up the difference.
"You take a meat cleaver to the budget you end up doing stupid things," Adkins said. "It's a lazy man's version of how to govern."
Higher education funding, low-income assistance for home heating and food stamps are additional programs that would see budget cuts - social service programs that already see greater participation during a sluggish economy.
"We're in the fog of incompetence," Adkins said, referring to Congress' inability to act thus far. "I think states are unfortunately in kind of a holding pattern."
The defense component of the sequester would add another damaging layer to states' and cities' sequester quandary. Virginia and California would be impacted the most with an estimated 123,000 and 126,000 jobs lost respectively, according to Pew, and would surely be a part of nine percent unemployment rate analysts are predicting if the "fiscal cliff" occurs.
President Obama is meeting with Congressional leadership today, but with Thanksgiving next week and lawmakers having already scattered back to their home districts, it is unlikely any deal - if one is reached - would be locked down until well into December. That leaves cities and states with growing uncertainty as 2013 gets closer.