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Philly mayor: Federal cuts hurt local governments

Michael Rubinkam, Associated Press

Philadelphia Mayor Michael Nutter speaks during a meeting of the State Budget Crisis Task Force at the National Constitution Center, Tuesday, June 25, 2013, in Philadelphia. The event is designed to bring attention to the eroding financial condition of state governments. (AP Photo/Matt Rourke)

PHILADELPHIA (AP) -- Automatic federal spending cuts that kicked in March 1 have seriously hurt city and local governments, hampering their ability to deliver essential services to citizens, Mayor Michael Nutter said Tuesday in a blunt message to Washington.

The federal sequester has transferred costs onto local governments, said Nutter, the immediate past president of the U.S. Conference of Mayors. In Philadelphia, he said, deep cuts to a program that helps homeowners avert foreclosure will potentially result in more blight, while the school district is facing an existential budget crisis that has forced it to lay off 3,800 employees and eliminate sports, music, art and all after-school programs.

"This is not a sustainable model for cities. The federal government cannot balance its budget on the backs of cities and local governments," Nutter said.

The second-term Democrat spoke at a meeting of the State Budget Crisis Task Force at the National Constitution Center in Philadelphia. The event was designed to bring attention to the eroding financial condition of state governments, but Nutter spoke on behalf of cities.

"We've already been to the fiscal cliff. We've made our cuts. We've cut back on services and we've raised people's taxes at the same time," Nutter said. "We're now trying to come back. Please don't stand in the way."

A top Treasury Department official said the federal government, after running trillion-dollar deficits as it tried to stabilize financial markets and stimulate the economy, has to begin getting its own fiscal house in order.

Having sent more than $280 billion to state and local governments between 2009 and 2012, largely to be spent on education, infrastructure and health care, "we need to begin pulling back the federal safety net," said Mary John Miller, Treasury's undersecretary for domestic finance, who was taking part in a panel discussion.

"As we see unemployment coming down, as we see the housing market beginning to recover, as we see the economy growing ... we see that we need to now turn our attention to reducing our federal deficits," said Miller, adding the administration of President Barack Obama is nevertheless "very eager to work with state and local governments" to ease the impact of the sequester.

Former President Bill Clinton was due to give the keynote address later Tuesday.

The nonpartisan State Budget Crisis Task Force — led by former Federal Reserve Chairman Paul Volcker and former New York Lt. Gov. Richard Ravitch — issued a report last year that said U.S. states are grappling with long-term budget problems that threaten their ability to pay for basic services such as law enforcement, local schools and transportation. The group cites rising Medicaid and pension costs, reduced federal aid and eroding tax revenues as a few of the challenges facing the states.

Panelists at Tuesday's symposium variously called for more flexibility in how states administer federally funded programs, a reduction in unfunded mandates, and an overhaul of the federal budget process.

"You will not solve this problem until you change the process," said John Sununu, a Republican former New Hampshire governor and chief of staff to President George H.W. Bush. "I don't care what you do to Medicare, Medicaid, you will not get effective changes until the legislators and the president can say, 'The devil of budget rules made me do it. I had no choice.'"