Agenda Packets - 1986/11/03 - Laserfiche WebLink

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FL-4. Federal Deficit Reduction Congress is the appropriate representative institution to determine how to reduce the federal deficit while retaining the federal -local partnership and programs to meet the needs of cities. The League strongly urges the President and Congress to work together to develop a balanced plan to raise federal revenues and restrain future expenditures to bring the federal budget into balance within the next three years. Minnesota city officials are also concerned about the use of Highway Trust Funds to balance the federal budget. Such actions break faith with the compact with highway users stating that highway user fees are to be used only for transportation purposes. They should not be used for deceptive efforts at deficit reduction. Rather, such funds must be returned to states in a timely manner with appropriate levels of spending authofrty in keeping with the revenues that accrue to the Highway Trust Fund. Action by the U.S. House of Representatives (in August 1986) to defeat efforts to restore the automatic triggering of budget cuts for cities is encouraging. Such decreases have already produced severe reductions in federal aid to cities; restoration cf automatic sequestering could result in the loss of at least 5.7 percent more in federal funds for cities beginning in October 1986 (as of final snapshot of federal deficit provided on 10/6/86). Such reductions would then occur twice within a single budget year for cities and fail to take into account the impact on cities or their residents. When added to the increase in the cost of new federal mandates; restrictions on cities' authority to raise revenues under new L_ reform legislation; and the record losses already incurred as a result of the sharp decreases in federal funds for cities since 1981, the triggering of a third round of automatic Gramm-Rudman budget cutbacks to citieu would produce sharp decreases in every federal program for cities while protecting 90 percent of total federalexpenditures from such across-the-board reductions. Congressional budget reconciliation action taken to reduce the curr_•nt federal deficit below the Gramm-Rudman target for FFY '87, while welcomed as a move that forestalls immediate additional Gramm-Rudman cuts, does nothing to resolve current federal deficit reduction policy which unreasonably targets 100 percent of federal programs to cities for severe budget reductions while protecting nearly all other federal expenditures fre such across-the-board budget cutbacks. -77-