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Council: 'Cliff A Threat To KC Economy, Services'

Julie Denesha

As the President and Republican Congressional leaders continue to butt heads in Washington, the “fiscal cliff” and its 10 percent across-the-board spending cuts loom.

What would be the effect on Kansas City? After city council hearings on the pending crisis, KCUR's Steve Bell notes that the most direct effect is not the most significant one.

Direct Federal Grants

The federal government pumps $100 million a year directly into Kansas City, Missouri projects and services in the form of grants. That would mean a loss of $10 million or so from the city's $1.2 billion budget if the nation goes “over the cliff” and faces 10 percent across-the-board budget cuts.

But former chamber of commerce CEO Pete Levi, who now promotes the city's interests in Washington, says that's not the main concern.

Job Cuts, Decreased City Revenue

Levy says, “It's not just the money coming directly from the federal government. It's the reduction in sales tax revenue, earnings tax revenue and all the other pots of money the city collects through which you provide those services. There's 35,000 some-odd federal employees in the metropolitan area. If they're furloughed or not rehired whatever happens that all has an indirect unintended consequence. :

Levi and fellow Polsinelli Shughart lobbyist Julius Hobson gave their report to the full council last week. Hobson elaborated on some effects of a layoff of federal employees mentioned by his colleague: “It means we always stand in line for TSA at the airport for security at the airport. There'll be fewer of those persons available. FBI agents, you name it. That's what'll get cut in this process.

Less Money For Transportation, Defense Contractors

Hobson also told the council the current crisis means no TIGER grants for transportation if and until Congress restores the program, and that Kansas City would also feel the impact of cuts to defense contracts. :

Hobson said some might not expect that much damage from defense cuts because we do not have a large number of military contractors in the city itself, “but in the state, we do. So the other part of the incapacitating effect for you is not just loss of the federal grants and the indirect effect that you'll receive from federal employees laid off, but the state's revenue will go down as defense contractors get hit.”

Recession, High Unemployment

Hobson said the layoffs, cutbacks, and effect on the confidence of the business community would deal the local economy a harsh blow, with the Congressional Budget Office predicting that the city woldll slide back into a recession with 9.1 percent unemployment.

Reduced Help With Disasters, Rescues

Councilman John Sharp, former head of the city's ambulance service, worried about the looming effects on public safety. Sharp noted that almost all the equipment and supplies that are used to effectuate rescues are a result of funding that the city has received from the Urban Area Security Initiative. He said those funds not only benefitted the Kansas City Fire Department, but also others in the region, wheresulting rescue resources are often shared.

No Quick Fix To Replace Lost Services

Finance Chair Jan Marcason said decisions are made or not made in Washington but experienced in local communities. “We're where the buck stops,” she said. “They come to us for services.”

And Marcason says cities won’t be able to fill the gap left by cuts to federal spending. :”We don’t have a lot of discretionary money to pick up the pieces that the federal government is abandoning,” she explained.

Are They Listening In Washington?

The Kansas City city council has gone on record as officially urging Congress to avoid the “fiscal cliff” or “sequestration,” as it is also called and to reach a compromise on the matter of budget cuts and revenue.

Resolutions by local governments, of course, have no binding effect on the Congress.

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