Philadelphia, Phoenix and Atlanta ask for the Treasury bailout

Cities Request $50 Billion in Aid, Aid Would Come from TARP;
Treasury Secretary Henry Paulson Has Denied Such Requests;
Cities Include Philadelphia, Atlanta, and Phoenix;
Obama Supports City Aid-Bloomberg Video
The Current financial crisis gives more pressure to the local state government. After California warns that the state may not be able to finance its budget. Now, the mayors of Philadelphia, Phoenix and Atlanta turn to ask the Treasury Department to set aside $50 billion of the $700 billion Troubled Asset Relief Program to spur infrastructure investment to create jobs and lift local economies. The mayors also asked for loans to cover short-term borrowing needs and to meet payroll. But Mr. Paulson denied such request.

Here is from WSJ:

In a letter to Treasury Secretary Henry Paulson, the mayors warned that their dire fiscal situations would result in layoffs and tax increases that would place another drag on the economy as the country tries to climb out of a recession. The chances of getting TARP funding appear remote, however.

On Wednesday, Mr. Paulson reiterated that the focus of the program is "to stabilize financial institutions and strengthen the financial system," rather than to provide assistance to state and local governments.

Philadelphia Mayor Michael Nutter, who is leading the campaign for federal help, said the mayors are targeting TARP because it has already been approved by Congress. "If our federal partners have a better source of funding, that's fine with me," he said.

One option would be a stimulus package that would include infrastructure spending that could benefit cities. Tom Cochran, head of the U.S. Conference of Mayors, which hasn't sought TARP help, said many mayors are hoping that Congress will take some action soon on a stimulus package that would include aid to cities.

In the past week, the National League of Cities and the U.S. Conference of Mayors both called for government funding for local infrastructure projects that can be ramped up quickly to create jobs and economic activity. On Thursday, the mayor's group said it had identified 4,591 infrastructure projects, from repairing sewer lines to renovating libraries, that would cost $24.4 billion and create more than 250,000 jobs.

Philadelphia, which has a $4 billion budget for 2009, faces a $108 million shortfall, nearly half from slower business activity and a drop in sales taxes, and the rest from lower real-estate-transfer and wage taxes. "Our revenues have fallen off the table," said Stephen Agostini, the city's budget director. Philadelphia's roughly $4 billion pension plan, which covers 33,000 retirees, had losses of more than $600 million through September.

In Atlanta, Mayor Shirley Franklin told city employees that a projected shortfall of as much as $60 million this year would result in a hiring freeze and a 10% reduction in wages and work hours of municipal employees beginning in December and lasting through June. That is in addition to layoffs of 350 employees earlier this year. "This is an emergency," said Ms. Franklin.

Sources :

The Wall Street Journal: Cash-Strapped Big Cities Seek TARP Funds to Stimulate Local Economies, November 15, 2008
Bloomberg Video: Video: In-Depth Look: Cities Seek Federal Aid, November 14, 2008 01:46 pm EST

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