By Ed Somers
November 9, 2009

A U.S. Conference of Mayors delegation – led by Vice President Burnsville (MN) Mayor Elizabeth Kautz - met in the White House with President Obama’s top economic team October 27 to discuss the ongoing recession and the unemployment crisis in cities. This meeting was a direct result of a letter that emerged from the Fall Leadership Meeting in Seattle requesting a discussion with the White House.

Participating for the Conference of Mayors were: Mayor Kautz, Trenton Mayor Douglas H. Palmer, Columbus (OH) Mayor Michael Coleman, Philadelphia Mayor Michael Nutter, Dallas Mayor Tom Leppert, Des Moines Mayor Frank Cownie, Providence Mayor David Cicilline, Atlanta Mayor Shirley Franklin, and Conference of Mayors CEO and Executive Director Tom Cochran.

Participating for the White House were: National Economic Council Director Larry Summers, National Economic Council Deputy Director Jason Furman, Office of Management and Budget Deputy Director Robert Nabors, Counselor to the Secretary of the Treasury Gene Sperling, Director of Intergovernmental Affairs Cecelia Muñoz, and Deputy Intergovernmental Affairs Director David Agnew.

During this discussion, the mayoral delegation presented the White House economic team with a detailed paper outlining the current and future economic condition in America’s cities with regard to unemployment and city budget shortfalls, and recommended actions to address these problems. A copy of that paper has been sent to all mayors and the Congress.

Among the recommendations were:

• Targeted Fiscal Relief for High Unemployment Cities and Metro Economies

• The Energy Efficiency and Conservation Block Grant Program (EECBG)

• The Community Development Block Grant (CDBG) Program at Inflation Adjusted Dollars

• The COPS Program

• Summer Youth Jobs – 2010

• The TIGER Grant Program – Round II

• School Construction

• Small Business Access to Credit

The purpose of the meeting was to begin a dialogue, and it was agreed that that this would not be the last discussion between the mayors and the White House.

In addition, a Conference of Mayors meeting was held on the same day with House Ways and Means Committee Chairman Charles Rangel (NY) to discuss the need for targeted fiscal relief for cities – which would have to emerge from that Committee.

The Conference of Mayors recently conducted a survey of its Workforce Development Council members regarding local unemployment rates. In many cases, cities were able to provide not only unemployment rates for the metropolitan areas, but also for the city proper.

Some staggering unemployment numbers were found in this survey including 13.9 percent in Long Beach (CA); 13.4 percent in Las Vegas (NV); 19.4 percent in National City (CA); 14.9 percent in Providence (RI); 11.5 percent in St. Louis (MO); and 10.9 percent in Cleveland (OH).

It is also important to understand the extent to which very large percentages of states’ unemployed workers are concentrated in metropolitan statistical areas. For example, according to the Bureau of Labor Statistics’ most recent data for Metropolitan Statistical Areas (MSAs or metro areas) from August 2009:

• In Georgia, the Atlanta and Augusta metro areas account for 62 percent of the state’s unemployed.

• In Ohio, the Akron, Cleveland, Columbus, Dayton, and Toledo metro areas account for 42 percent of the unemployed.

• In Iowa, the Des Moines, Cedar Rapids, and Waterloo metro areas account for 31 percent of the unemployed.

• In Texas, the Dallas, Houston, San Antonio, and Austin metro areas account for 65 percent of the unemployed.

• In Florida, the Miami, Orlando, and Tampa metro areas account for 58 percent of the unemployed.

• In Arizona, the Phoenix and Tucson metro areas account for 75 percent of the unemployed.

• In California, the Los Angeles, Riverside, and San Francisco metro areas account for 57 percent of the unemployed.

In an effort to better understand the employment and city budget crises faced by cities today, the Conference of Mayors conducted a brief survey of America’s mayors. One hundred and fifty cities ranging in size from Los Angeles and Chicago to those having populations fewer than 10,000 responded. Some key findings were:

• The three employment sectors most often identified by mayors as experiencing the highest levels of unemployment are construction (by 75 percent), manufacturing (by 56 percent), and retail (by 44 percent).

• Two-thirds of the cities project that they will experience a budget shortfall in the current fiscal year.

• Nearly three-fourths of the mayors (74 percent) report that cuts in state funding to their cities (either grants or passed-through revenues) have contributed to their budget shortfalls.

• Actions most often being taken to avoid budget shortfalls this year include postponing projects or initiatives (by 81 percent), eliminating city positions through attrition (by 75 percent), and reducing purchasing and procurement (by 73 percent).

• More than four in five mayors responding (81 percent) anticipate a budget shortfall in their next fiscal year.

• Half of the mayors report that their budget situation has affected their ability to engage in job-creating projects.

• Mayors say that additional federal assistance can be most effective in creating jobs and meeting local needs if it is focused on local transportation projects such as transit, roads, and bridges (91 percent of the mayors cite this), community and economic development (85 percent cite this), water and sewer projects (71 percent cite this), energy and environmental projects (66 percent cite this), and public safety personnel (56 percent cite this).

• Most mayors (62 percent) believe that conditions in their cities are serious enough that a program of targeted fiscal assistance is warranted to help prevent further drastic city budget reductions.

IHS Global Insight projects that unemployment will peak in early 2010 at 10.1 percent, and it will stay above nine percent through 2011.

Job losses will continue into 2010, with payroll levels not regaining their 2007 peak until late 2012. Even then the jobless rate will be 8.2 percent, 3.5 percentage points higher than the late 2007 level. Only in 2014 will the national rate of unemployment fall to 7.5 percent.

Metro economies over this time will follow a similar trajectory marked by stubbornly persistent unemployment, but wide differences will emerge among metros, with many falling well behind even this slow pace. For example, the average unemployment rate for 2010 will, in 311 of the 363 (85.7 percent) metro areas, exceed that of 2009.