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Cities are going to hurt. These are going to be very difficult times for cities.— Mayor Dannel Malloy
The financial crisis has dug in its heels and Treasury’s plan to buy up troubled assets hasn’t been able to dislodge them. There have been numerous reports that the crisis has spread outward from Wall Street to afflict auto dealerships and the commercial paper that businesses and public institutions use to meet payroll. But when The New York Times reported last week that cities, states, and local governments are having difficulty in bond markets – stoking fears that infrastructure projects, services, and payrolls will have to be canceled or scaled back – MayorTV decided to set off to several cities to ask mayors how the financial downturn is affecting them.
Our first stop was Stamford, Connecticut where Mayor Dannel Malloy was anything but optimistic about the economy: "Cities are going to hurt. These are going to be very difficult times for cities."
Stamford is, of course, particularly vulnerable to a downturn on Wall Street. The city is the North American headquarters of UBS and soon of the Royal Bank of Scotland. And many New York bankers, lawyers, and accountants reside in Stamford, contributing significant sums to the city’s tax base. As the Mayor described: "We expect to see further serious job loss in Connecticut, either from employment in Connecticut or in New York City."
He worries that the already significant budget deficit expected by Connecticut’s Comptroller will burgeon further “if income and capital gains tax revenues fall short of their diminished expectations…”
Mayor Malloy is adamant that the federal government focus on long-term, responsible investment. Calling the increase in government operating expenses under the Bush administration “utterly ridiculous”, he explained how separating federal capital expenditures – on infrastructure projects – from operating expenses would allow the government to borrow money at lower interest rates (while perhaps increasing interest rates on general government spending which, the mayor notes, might even be a good thing).
The Mayor insists that the federal government must soon develop and implement a stimulus package that focuses on economic recovery and long-term growth instead of on consumer spending (as the first stimulus package did).