The Ferguson Group Blog

Debt Crisis – Impacts On Local Government

Yesterday Moody’s Investors Service noted possible downgrades in the triple A ratings of 162 local governments in 31 states. This action represents fallout from Moody’s decision on July 13 to place the triple A rating of the federal government under review for downgrade at least in part due to the debt ceiling crisis yet to be resolved by Congress and the Administration.

While approximately 400 other triple A rated public entities have not been placed on review for possible downgrade, the impact on those under review could be bad or devastating especially given the current economic climate in affected areas. Moody’s noted criteria it used for decision making on the downgrade review included high federal employment and exposure to capital markets disruptions. Moody’s also looked at sensitivity to macroeconomic cycles and available financial resources to offset these risks.

Moody’s decisions impacts 66 cities, 53 counties, 29 school districts and 14 special tax districts. The decision affected entities in 31 states with Virginia and Massachusetts having the most entities placed on review for downgrade.

As of 2:30 pm EDT on July 29 Congress had not voted on raising the debt ceiling and the President has indicated strong opposition to plans emanating from the House of Representatives. We will continue to provide updates on the debt ceiling situation.

 
-Posted by Mike Miller, The Ferguson Group

Competing House/Senate Plans To Resolve Debt Crisis

House Speaker John Boehner and Senate Majority Leader Harry Reid unveiled competing plans to increase the nation’s debt ceiling and reduce federal spending, including cuts to programs of interest to local and regional governments.

Both plans require $3 trillion in cuts over the next ten years, split equally between discretionary and nondiscretionary spending.  Senator Reid’s proposal would not target the biggest entitlement programs (Medicare, Medicaid, Social Security), while the House plan does not rule out cuts to these programs.  Both the Boehner and Reid plans would create a bipartisan congressional committee to identify spending cuts beyond the initial $3 trillion cuts.  Neither plan specifies a revenue raising plan (i.e., tax increases).

The biggest difference between the two proposals is in the mechanism for increasing the debt ceiling and enacting spending cuts.  The Senate plan provides a one-time $3 trillion increase in the debt limit while the House plan requires a two-step process: a $1.2 trillion initial increase followed by an additional $1.8 trillion early next year contingent upon the bipartisan committee identifying an equal or bigger set of spending cuts.  The House plan has been criticized because it requires another debt limit vote very soon; critics of the Senate point to the illusory nature of some of the proposed cuts.

The two bills can be read here:

Boehner bill - http://tinyurl.com/3u985fj

Reid bill - http://tinyurl.com/3vq72fh

Both plans are likely to be debated in the House and Senate this week.

For more information, contact Mike Miller at [email protected].

Eshoo and Shimkus Introduce Next Gen 9-1-1 Bill

Reps Anna Eshoo of California and John Shimkus of Illinois recenty introduced legislation to provide grants to local governments for next generation 9-1-1 equipment, services and training,  including sensors and alerting devices.  If passed and funded, this program will provide $50,000,000 annually in grants to state and local governments to update local equipment and training to ensure reliability and improve emergency response times.  These flexible funds will support a wide range of technologies, from communications infrastructure to gunshot location systems.

To learn more about the allowable uses for this future funding source or for information on how to contact your Congressional delegation to voice your support and request that they cosponsor this bill, please contact TFG Partner Amanda Wood at 202-331-8500. 

U.S. Conference of Mayors To Congressional Leaders: Resolve Debt Crisis

On July 23 the U.S. Conference of Mayors urged congressional leadership and the President to reach agreement on raising the debt limit. “Economists agree that default will have an immediate and catastrophic impact on our cities, and the implications are global,” the Mayors wrote in a letter.  “A credit downgrade will plunge us into a deep, double-dip recession. We urge Washington to act now.” 

Download Conference of Mayors Letter

As of the morning of July 25 House and Senate leaders of both parties were not reporting progress.  House Majority Leader John Boehner (R-OH) wants to raise the debt limit and cut spending in two steps while Senate Majority Leader Harry Reid leans toward coupling spending cuts with the debt ceiling increase.  Mr. Boehner’s plan provides a short term debt limit increase which is opposed by President Obama.  On July 19 the House passed HR 2560, the Cut, Cap, and Balance Act of 2011.  The vote was widely viewed as symbolic and the Senate has not taken any action on the House bill.  There is no other relevant legislation currently pending in either chamber of Congress.

Congress has until August 2 to raise the debt limit or risk delays in payments to state and local governments and other entities.  A  June 3 Congressional Research Service (CRS) report notes the federal government will have to issue an additional $738 billion in debt above the current statutory limit to finance obligations for the second half of FY2011.  Unless Congress and the President agree on increasing the debt limit then federal spending would have to be decreased or federal revenues would have to be increased to cover the gap between the limit and the amount owed.  

According to CRS the federal government would have to eliminate all spending on discretionary programs, cut nearly 70% of outlays for mandatory programs, increase revenue collection by nearly two-thirds, or take some combination of those actions before September 30 in order to avoid increasing the debt limit in FY2011.  Additional spending cuts and revenue increases would be required in FY2012 and beyond to avoid increasing the debt limit.  CRS found that a default by the federal government “could result in significant economic and financial consequences that may have a lasting impact on federal programs and the federal government’s ability to borrow in the future.”  The Obama Administration estimates the debt will increase annually by $1 trillion between now and 2021 if spending and revenues continue on current paths.

-Posted by Mike Miller, The Ferguson Group

Local Airports Continue to Lobby Congress as FAA Heads for Shutdown

The Federal Aviation Administration is headed for a partial shutdown starting at midnight tonight after Congress left town this afternoon without dealing with an extension of the current FAA authorization set to expire tonight.

The GA Airport Coalition (GAAC), which represents the interests of general aviation airports in localities across the nation, has been engaged in a robust advocacy campaign urging House and Senate leaders to join forces and deliver a complete reauthorization bill to provide the greatest user benefits possible to general aviation airports.

GA Airports, which number more than 6,000 in North America, are an important component of many local economies. GA Airports are those airports that do not take scheduled commercial airline traffic. They are often managed by cities, counties and other local organizations or authorities.

DOT Secretary Ray LaHood said in a statement that FAA will be forced to withhold money for states and individual airports as a result of the lapse in authorization. For example, Florida airports will not have access to over $40 million in funding and the state of California cannot use nearly $38 million. The agency also cannot give the state of Ohio over $10 million in airport grant money or the state of Virginia over $16 million for which they are eligible, he said.

The shutdown will affect some 4,000 FAA employees funded by three appropriation accounts which are drawn exclusively on the Airport and Airway Trust Fund: Facilities and Equipment; Research, Engineering and Development; and Grants-in-Aid to Airports.  Programs under those accounts will be suspended starting tomorrow.  Funding under the Operations account (which includes all air traffic controllers and aviation safety inspectors) will not be affected.  

To read more on the GA Airport Coalition’s efforts related to the FAA Reauthorization process or to get involved, please visit the website at www.gaairportcoalition.org.

 
-Posted by Jennifer Imo, GA Airport Coalition

(Jennifer Imo is a partner at The Ferguson Group and serves as the Executive Director of the GA Airport Coalition). 

Boxer Releases Outline of Transportation Bill

Senate Environment and Public Works Committee Chairwoman Senator Barbara Boxer released an outline of the Committee’s plan to reauthorize SAFETEA-LU. The Senate’s bill will be called MAP-21 for Moving Ahead for Progress in the 21st Century. This will be a two year authorization bill which maintains current spending levels and consolidates 87 surface transportation programs into less than 30 programs.

$37.4 Million in Land and Water Conservation Fund Grants Announced

The U.S. Department of Interior yesterday announced $37.4 million from the FY11 Land and Water Conservation Fund (LWCF) for grants to establish and renovate parks and open spaces nationwide.  This funding is distributed by formula to each State and then awarded by competitive grant to the local level. Funds may be used, for example, to establish urban parks and community green spaces; to restore and provide public access to rivers, lakes and other water resources; and to conserve natural landscapes. Grant-assisted areas are to remain available in perpetuity for public outdoor recreation use, or be replaced by lands of equal market value and recreation usefulness. To learn more about the LWCF, your state’s allocation and how you can apply for these funds, please visit www.nps.gov/lwcf or contact TFG’s parks and recreation team leader, Leslie Mozingo, at [email protected] or 202-255-5760.

-Posted by Leslie Mozingo, The Ferguson Group

Violence Against Women Act Up for Reauthorization

The Violence Against Women Act is up for reauthorization, so the Senate Judiciary Committee held its first hearing on July 13. The Act funds grants for services and resources such as 24/ 7 crisis hotlines, campus/school-based teen dating and Intimate partner violence prevention programs, legal and health advocacy services, court training and technical assistance, rape crisis centers and domestic violence shelters, and other program services assisting victims of domestic violence and sexual assault in thousands of communities across the nation. 

Joining clinical psychologist Phil McGraw, known as Dr. Phil, who has launched the END THE SILENCE ON DOMESTIC VIOLENCE campaign, was Michael Shaw, co-director of the Waypoint Services for Women, Children and Families in Cedar Rapids, Iowa, who testified on behalf of TFG client the National Alliance to End Sexual Violence. 

The Office on Violence Against Women funds 21 grant programs – three of them formula, the remaining 18 discretionary. In 2010 the DOJ awarded 776 grants to local and state organizations totaling $389,283,527. For a description of these grant programs visit http://www.ovw.usdoj.gov/ovwgrantprograms.htm.

Local Government Groups Oppose H.R.1002

Several local government interest groups wrote to the House Committee on the Judiciary expressing opposition to H.R. 1002, the Wireless Tax Fairness Act of 2011, noting that the bill preempts state and local taxing authority. H.R. 1002 is scheduled to be marked up by the Judiciary Committee today. The letter was signed by: the National Association of Counties, the United States Conference of Mayors, the International City/County Management Association, the Government Finance Officers Association and the National Association of Telecommunications Officers and Advisors. If your Representative serves on the House Committee on the Judiciary, contact them at (202) 224-3121 about opposing H.R. 1002.

Protect COPS funding - Support the Schiff Amendment

House Appropriators are voting on the FY2012 CJS spending bill today, which funds the Department of Justice. The bill currently eliminates funding for the COPS program and the COPS Office, in addition to several other local law enforcement programs. Rep. Adam Schiff (D-CA) is expected to offer an amendment to restore COPS funding. If your Representative serves on the House Committee on Appropriations, contact them at (202) 224-3121 about supporting the Schiff amendment.