What Cities Stand to Lose From the Fiscal Cliff

The urban programs that would suffer most from budget sequestration.

Image
Shutterstock

If there's one thing Republicans and Democrats agree on about the fiscal cliff, it's that going over it would be a huge mistake for the country. Unfortunately that's the only thing they seem to agree on, which leaves them at least one thing shy of actually avoiding disaster on January 2. Congressional leaders will begin discussions with the White House tomorrow, but with just a few weeks left until the deadline, the situation has become urgent.

Budget sequestration, as the cliff is more officially known, will put a roughly 8 percent cut on spending in cities, suburbs, and rural areas alike. With the help of a September report, issued by the Office of Management and Budget, we get a sense of which urban programs have the most at stake. The OMB report [PDF] offers preliminary estimates on the "devastating impact" sequestration will have on roughly 1,200 specific budget lines:

The specter of harmful across-the-board cuts to defense and nondefense programs was intended to drive both sides to compromise.  The sequestration itself was never intended to be implemented. The Administration strongly believes that sequestration is bad policy, and that Congress can and should take action to avoid it by passing a comprehensive and balanced deficit reduction package.

For starters, the cliff would have a considerable impact on life in Washington, D.C. The city's court system is subject to spending cuts, as are things like tuition support for residents, school improvements, and emergency planning. The Smithsonian, National Gallery of Art, and Kennedy Center will all take an 8.2 percent hit, as will operating expenses at the National Archives and salaries at the Library of Congress. The metro system is subject to a $12 million sequester (more on transit cuts below).

More broadly, the Department of Housing and Urban Development faces some steep cuts. The $4 billion operating fund for public housing will get slashed roughly $325 million. Tenant-based rental assistance is set to lose $1.5 billion, and project-based assistance will fall $772 million. The nearly $2 billion in federal homeless assistance grants will be $156 million lighter. Housing programs, in general, will take the 8 percent hit with few exceptions.

Some of the most severe reductions in city life will fall on transportation. The Federal Transit Administration will see its administrative costs ($8 million) and capital grants ($156 million) suffer. TIGER grants, a special item that improves alternative forms of urban transport, stands to lose $41 million from its $500 million budget. However TIFIA loans, another mechanism to boost non-highway projects, appear to be exempt from sequestration.

Intercity travel takes it on the chin as well. Amtrak's operating subsidy and capital grants program are scheduled for a $38 million and $78 million cut, respectively. TSA will lose $79 million for Air Marshals and a combined $448 million in aviation security programs. The Federal Aviation Administration stands to lose hundreds of millions in operations, facilities and equipment, and trust fund budget lines.

How those numbers translate into actual jobs and quality of life is illustrated in a recent letter [PDF] drafted by Congressman Norman Dicks, ranking Democrat on the House Appropriations Committee. He estimates that the aforementioned cuts will lead to 7,240 fewer TSA officers and roughly 2,200 fewer air-traffic workers. That will no doubt mean fewer daily flights, longer lines, and delayed package delivery. It could also cause "significant delays" to the implementation of the FAA's critical NextGen system upgrade.

Highways remain somewhat immune to the cliff — the depleted Highway Trust Fund is exempt from sequestration — but not entirely free of its grasp. The trust no longer covers all annual road spending, which means it must borrow from the general taxpayer fund to supplement costs. Roads are scheduled to lose $471 million of that $6.2 billion crutch.

These may be the most glaring cuts to urban life, but they're far from the only ones. FEMA will take a hit at a time when it's still aiding recovery from Hurricane Sandy: 536 core personnel will lose their jobs, according to Congressman Dicks, and $580 million of FEMA's $7 billion disaster relief fund will be sequestered. Programs related to the environment and education face the fiscal cliff as well.

President Obama and House Speaker John Boehner, the two primary figures in the discussions, have made overtures to compromise in recent days. America's cities will be watching, and waiting, to see if they mean it.

Top image: Kinetic Imagery/Shutterstock

About the Author