Schumer Unveils $40 Billion Bipartisan Aid Package Before U.S. Conference of Mayors

SCHUMER UNVEILS $40 BILLION BIPARTISAN AID PACKAGE BEFORE U.S. CONFERENCE OF MAYORS

Addressing 300 Mayors from around the nation, Schumer discusses plan to send $40 billion infusion to help states and cities weather impending fiscal crises

Schumer will co-sponsor aid bill with Senator Olympia Snowe from Maine giving legislation bipartisan support

US Senator Charles Schumer today issued the following statement when he addressed the plenary session of the 71st Winter Meeting of the United States Conference of Mayors:

"I want to welcome you all here today at a critical time in the history of government in our nation. My frequent journeys around my home state of New York bring me into constant contact with local officials and I am happy to see so many of them here today.

"As I scan the crowd - 300 strong! - I see friends from Buffalo, Rochester, Glen Cove, Hempstead, White Plains, Mount Vernon, Schenectady, Freeport, Rockville Center and Rome, New York.

"Your show of solidarity is indeed impressive and, I believe, indicative of the dire situation that confronts you all. I stand before you today to tell you that if my Republican colleague Olympia Snowe and I have our way, you will not face these troubled times alone.

"The two of us know very well the value that cities play in making America work: metropolitan areas account for 84 percent of national employment and over 88 percent of labor income. If U.S. metro areas were nations, 48 of the world's largest economies would be located within the United States.

"As the distinguished mayor of Boston, Thomas Menino, has said, 'Cities are the front lines of America, from economic security to homeland security.' America cannot afford to let these hubs of social and economic progress suffer, and yet this is exactly what is happening today.

"As you are all acutely aware, our state and local governments are in critical condition.
Although the outlook for our economy in the long run is good, its present condition is fraught with insecurity, requiring an immediate and direct short-term cash infusion.

"As mayors, you've been hit with a double whammy over the last two years. The recession and our nation's continuing economic malaise have caused your revenues to plunge. The stock market bubble burst and the tragedy of September 11th sent shockwaves throughout our nation. While the states first felt the impact of these events through declining employment and falling stock prices, cities now face the challenges of declining property values, decreasing consumer spending, and a decline in financial support from the states.

"As a result, your budgets have come under dramatic fiscal pressure that has been exacerbated by the new need to spend millions on homeland security. I lobbied hard to ensure that some of these costs were offset by aid from the federal government, so I am well aware that the delay in getting you the financial assistance you need to handle your new police, fire and emergency personnel expenses has only compounded your plight.

"The fallout from these shocks has been substantial. According to the National Governors Association and the Center for Budget Policy and Priorities, this dangerous cocktail of economic downturn, new security needs and the bursting of the economic bubble will result in a total budgetary shortfall for all states in fiscal year 2004 of between $61 billion and $85 billion.
A more recent figure from the American Legislative Exchange Council estimates the figure will be as high as $90 billion - the highest since World War II.

"In my state, the budget deficit is expected to be 20 percent of New York's annual budget. My hometown, New York City, has been forced to make multiple rounds of painful budget cuts totaling billions of dollars in order to deal with this crisis, while raising property taxes over 18 percent in order to guard against future and all-but-certain shortfalls.

"I know that other cities in my state and across the nation face similar situations and are taking equally drastic measures, both in cutting services and raising taxes. Such action, however, will dramatically undermine the quality of life our citizens have a right to expect, either by reducing the resources available to law enforcement, firemen, and other emergency personnel, or by forcing them to bear the weight of a crippling tax burden.

"I am sure that all of you will agree that the long-term solution to this dilemma is strong economic growth. Unfortunately, all economic indicators show that this panacea will not come soon enough to avert the fiscal crises you all face.

"In December, payrolls in the manufacturing sector declined for the 29th straight month. Not surprisingly, unemployment at that time remained steady at 6 percent nationally. Although consumer spending has remained steady, the stock market's 23 percent drop in 2002 has left many families scrounging to pay for their children's education and to finance their retirements. As a result, many economists expect only modest economic growth of less than 2 percent annually for the foreseeable future.

"At the federal level, several proposals have been made to shake our economy out of its stupor through a variety of tax cuts. I believe the stimulus plan should deliver tax cuts and short-term fiscal relief in a responsible manner.

"This is why any economic proposal that Washington puts forth must include a short-term bridging measure so that our states and cities can weather the current economic storm. If not, any federal tax cuts will likely be consumed by tax increases at the local and state level as officials of these governments take back money generated by federal tax reductions to finance their deficits. We as leaders will have simply robbed Peter to pay Paul.

"In addition, the continuing fiscal crisis will force states and municipalities to layoff thousands of workers, inflicting further damage on the economy by increasing unemployment and reducing money these people have to spend. Without a short-term bridge, any federal plan to stimulate the economy will be dead on arrival.

"So how do we avoid this scenario? As a national crisis, it requires a united, bipartisan solution. In the words of President John F. Kennedy, 'Let us not seek the Republican answer or the Democratic answer but the right answer.'

"Republican Senator Olympia Snowe and I believe this answer is very simple: the federal government must provide direct aid to state and local governments. The point of this aid, however, is not simply to staunch the red that is bleeding into your budgets - we have structured the plan so that federal aid will also act as a life-giving transfusion to stimulate your economies.

"Later today, Senator Snowe and I are introducing the bipartisan State and Local Aid and Economic Stimulus Act of 2003. It would inject a one-time $40 billion booster shot to America's States and Cities, providing both with direct federal aid.

"The first $20 billion will be allocated to each state based on size, as measured by population. The second $20 billion will be allocated based on need, as measured by the change in each state's unemployment level from 2000 to 2002.

"Most important to all of you gathered here today, our bill requires that half of any funds going to states goes to local governments. The funding you receive will not be subject to any administrative costs levied by the states, nor will its distribution be at the discretion of state governments.

"There are no ifs, ands or buts: the money you receive will be allocated based on the population and unemployment formula I have outlined above. This means that all of your cities will receive cash infusions into their budgets.

"By providing this money with no strings attached, this bill meets the litmus test for fiscal stimulus: getting money quickly into the hands of people who need it and who will spend it quickly. Because of its size, the bill will also effectively staunch the need for future tax increases and help avoid layoffs, allowing people to keep their jobs. It will also allow states and municipalities to avoid severe cuts to vital services, improving the chances that police, fire and education funding will emerge from this ordeal unharmed.

"Senator Snowe and I are fortunate that our bill enjoys substantial support from Republicans and Democrats, both from those who support and oppose the President's tax cut package. The Bush Administration has also acknowledged that it expects to work with Congress to reach a consensus on its economic proposal, so both Senator Snowe and I are hopeful that we can include our bill as part of any economic stimulus package.

"In order to ensure that this bill passes, however, we need your help. Despite the strong bipartisan support our proposal already enjoys, many more Congressional representatives must sign on in order for it to become law. We need you to start beating the drum for this bill in the halls of the Capitol. Only then will members of Congress understand how important it is to the places and people they represent.

"So as you gather here today to discuss how best to deal with the fiscal crisis you all face, I urge you to embrace this bill and consider how best to convince your federal representatives to do the same. Both Senator Snowe and I will work tirelessly in the Senate to convince our colleagues to approve this aid.

"With your help, however, we can ensure that this aid comes sooner rather than later. At that point, I am confident that our cities, states and nation will have started upon the road to sustainable recovery and, soon thereafter, Americans will once again be able to enjoy the quality of life they deserve."