Transcripts For CSPAN2 Today In Washington 20091124

pathway toward a solution and it is quite simply subjecting all of its complexities to the disciplines market analysis and economics. so, what is the problem? let me say i can tell you the problem in the united states. it is simply that this country, the historic and the contemporary paragon of market capitalism runs its water systems on a thoroughly lamb was modeled from top to bottom. david thank you 13 talk of california. it is the people's republic of california. [laughter] because the philosophy and political theory of water in this country is all seeing state must deliver water has a free good tall times to all people. its sharp contrast to a nasty capitalist model which would require people in a deficient system to pay for water. >> ok. [applause] presentation, would want to be the mayor of an american city. [laughter] this is a kind of a little bit of group therapy. we thought instead of having one of them there would be comfortably ahead for together and we do have an extraordinarily broad set of cities and regions represented. actually one from each timezone. i'm going to introduce each of the mayors and then we will have a conversation about 10:45 we will open it up to questions and we will have time for a half an hour of questions. on my immediate left is michael nutter it was the mayor since 2007. he is a graduate of the wharton school of business. you are going to see a trend here. he previously worked in investment banking and brokerage firms. next to him is elaine walker who has been in bowling green, kentucky for 15, more than 15 years and still cannot tell us definitively why it is called bowling green but she assured us they are actually building a bowling green there and not with federals stimulus funds i might add. she has had a very-- very career. she worked for a tv station in los angeles and she has been the mayor, the senior mayor on this panel since 2005. both mayor nutter and mayor walker are democrats, but scott smith the next jones omen is the mayor of mesa, arizona. he is a republican. he has been mayor since 2008. pre-obviously bork fred number of firms including housing and construction firm and he too has an mba. his is from arizona state university. at the end we have chuck reed, the mayor of san jose california a job he has held since 2007 so we can see if you look at those charts just when things started to get that each of these mayors took their jobs which is another question about their sanity but it does sort of make you realize why they don't have to worry about anybody else challenging them given that who would want the job given what we have been told going forward. mayor readed the graduate of the air force academy in has a law degree from stanford law school. he was a practicing attorney in san jose before he took the job as mayor of that city in the state of california which we here in washington looked at as a model because when we feel bad about how congress functions we look to the california legislature and we say it could have been worse. [laughter] we are going to start by asking each of the for may years to speak very briefly a couple of minutes to give us a snapshot of the economic and fiscal conditions in his or her city and then we are going to go from east to west and we will start therefore with mayor nutter. we were going to go alphabetically but i could not figured out with four people. give a two minute snapshot of the economy and fiscal condition of your city. >> thank you very much. just one point. they mentioned i started in the seven. i was actually elected in 07 and started in january of 08. i know there many journalists in the audience and i don't want to get caught up in some journalist confirmation process on that particular issue right now. >> i trust you have paid all of your taxes. okay, fine. [laughter] >> the answer is yes. >> that you can recall. >> they are all paid. no one is looking for me. the physical condition of philadelphia september of 2008, september 11th by sheer coincidence i announce the city was facing at least a 450 million-dollar, five-year plan deficit. philadelphia unlike many cities across the country we have a financial oversight into deed that requires balance five-year plans in each year that plan must be balanced so it helps to ensure a certain amount of fiscal discipline. we emphasize that the time to the public the at least part. we knew this was growing, did know how far was going to go. at the time citizens for a little stunned because of course it does pass the budget in may, a couple of months earlier it was balanced and everyone seemed happy and like this going on. you will recall doty look at any of the newspapers from that time the following week, over the weekend i believe one of the major financial institutions was in the midst of a meltdown and every day the following week on the front page of our local paper, whether was aig, fannie mae, freddie mac, merrill lynch, washington mutual everyday somebody was falling apart so unfortunately the citizens began to better understand our circumstance. in the midst of all that the phillies were on their way to winning that world series, and we were about to elect for the first time an african-american president. we on the other hand in city government were trying to figure out which they do we tell the citizens that we now lite bit of a disconnect. i have no complaints of it than the fact that i can use a dime for our budgetary challenges though on one day we can announce that 10:00 in the morning in new grand opportunity from the federal government and later that afternoon announce more layoffs and service cutbacks. the public is confused as to what in the world is going on and that is a major challenge for us. last point. banks, investment banking firms, auto, all too big to fail. cities in metro areas all to import mcphail. we cannot and we will not the wadah business. we are a service organization. we have obligations and responsibilities that i would suggest a far greater and at least equally if not more important than anything else going on in terms of business and industry. we provide desperately needed services and drive the economic engines in our cities and metropolitan areas unlike any other industry in the united states of america. >> thank you. >> first of all thank you for allowing me to be here because you are hearing from the big guys and then they invited me to represent smaller cities. i am from the city of bowling green, kentucky,, the corvette. kentuckians the third largest state in terms of automotive industry. the good news for our state is that we are the only state where all favor oem's the ben maintains that we still are continuing on with the core of that. the good news is we have kept the corvette and the bad news is in the first eight months of this year they have been furloughed more than they have actually worked which has a direct impact on our revenue source, are major revenue source which is occupational license tax. occupational license tax is 67% of our general fund. >> please explain what an occupational license tax is. >> basically what it is instead of an income tax we take 1.85% immediately off of every dollar that is paid to a person who works in the city so there is no filing of any kind of a form. it is just automatically paid. i was looking at steve's figures and the only revenue source that is up which is sales tax has no impact on my city so that is the good news/bad news. we have about 5,000 people employed in our region in the automotive industry so we have seen a reduction. for us that it's been about a 10% cut in our general fund revenue and when you look at some of the brighter side, we do have western kentucky university which has grown in this period said that is how we have tempered some of the cuts. we also are the home of the major medical center that supports the region so that is also allowing us to stabilize somewhat in terms of our revenue sources. we have got other pressures as well. you talk about the state. not only does the state tend to siphon off most of what comes in from the federal government but they also have done things like we are required to be part of the state employee retirement system. the state doesn't make their payments but they find local governments $5,000 a day if you don't make your payments of cities and counties are maintaining the limited health of our state employee retirement system. we have got a telecommunications tax. the state says we are going to collect it for you but we will hold you harmless. we are losing $140,000 each year because they miscalculated, so all of these things have caused us to not necessarily lay off but we have consolidated positions. we have basically cut or reduced our employee workforce by 7% and clearly we are going to have to be of little bit more created in the future. i am an optimist by nature so despite the first 30 minutes of extremely devastating information i think that these problems also provide us with opportunities and they have to have a paradigm shift. it really cannot be just with local government, state government in federal government. we have that to engage the public. with that to engage more of the private sector. what we are doing is looking at public-private partnership. we want businesses to step up and help us create the access roads to their business. we are not going to buy the property anymore and you were going to pay for it in relocate utilities. the other thing we have that to do is to engage the public. we don't have the money to create new roads or expand our roads but it they modified their driving habits we can do much more by modifying driving habits than we can buy spending half a billion dollars in terms of an investment in our roads so we are going to have to engage the public. we are going to have to become more actively involved in the state level in more actively involved that the federal level and we have got to be more creative. we have a tendency to do that because we can't pull from and the lower soares than the can't manufacture money and we can't send it but upstream so we are more creative. >> thank you. mayors got-- mayor smith. i am sorry. >> my first name is really mayors so that is okay. [laughter] mesa, arizona is probably the biggest city of never heard of. we are in the phoenix metropolitan area. we are actually the 38 largest city in the country. we are actually in the community for which they termed boomer was invented because we are a very large city that lives in the shadow of the city of phoenix among several other large cities and in mesa our biggest challenge, growth has been our biggest industry. we have grown at a tremendous rate. when i graduated from high school 35 years ago mesa was a town of 74,000 people. now foreigner and 64,000 people. the other thing is that until literally this last month maza was the largest in america without the property tax so we rely completely on sales tax, on stage shared revenue ended arizona of the state does not levy a property tax. their revenues are primarily sales tax and income tax and on earnings from our enterprises, our water company in wastewater and things like that. obviously two-thirds of those industries people still use water and they still have garbage. those of held fairly steady but our sales tax has gone really in the drang. i took office in june of last year with a three year four year plan to change the way mason city government did business. that was my campaign and i meant to actually live up to my campaign. >> how was that working out for you? [laughter] @ we provided services. nothing was off the table. we looked at some of the changes chris talked about and the nature of city government. are far departments and arizona are far departments as they do in many parts of the country provide emergency medical services. in fact the city of mesa over 70% of our annual calls i medical related so we are sending out a three quarter of the million-dollar fire truck with four highly trained professionals to rapp someone sprained ankle as well as to save their life if they are an auto accident and we decided that modeled could not continue. we worked out a way to try something different in the service delivery. at our police went to several different methods that they changed and providing services. we simply decided, we simply cannot continue to build their business the same way we have because the world had changed. we treat this financial crisis as not being something we are going to get out of. we think this may be as significant as the last depression and that it changes not only how governments operate but it may change the relationship between local government, state government in the federal government. we have seen that already with their state government. our relationship with the revenue sharing has changed dramatically. we'll note that will ever go back to the way it was too, three, four, five years ago. growth has been our industry obis the with the housing boom. we did very well. with the housing crash we suffered but we also have things that are basic and go beyond. mesa is the home of the helicopter-- boeing has a large helicopter manufacturing plant and the helicopter without the road there. the overall stress and pressure that the reductions sales tax which is not getting any better, as a matter of fact once again our city manager got up and said we hope this year would not be as bad as last year and it hasn't. last month 17% year-over-year. in the last two years we are down in month over month almost 35% and a portion of our budget provides literally one-third of our incomes that we have huge challenges. the good news is what we are looking at is 16 to 17%, 18 month budget shortfall, the restructuring that we implemented actually created greater savings than our budgets anticipated. it does prove that he can divide services for less money and a more efficient manner. i will give you one great example to conclude. our libraries cut hours dramatically. the libraries and nays are literally closed two days a week. over the last year to efficiencies, through better use of technology, we actually sir moore's citizens on fewer personnel with a 30% reduction in resources available, more books than serve more citizens than we have in the previous years. we found that it can be done but were wondering how much more can we take from the well. the well is getting pretty dry. >> they are read has the dubious honor of having the city with the highest complaint rate at over 13% and told me earlier that he took office and they were already five years into a financial crisis in san jose. so, how bad is it out there? >> it is pretty bad. let me tell you a little bit about san jose. we are the tenth largest city in the country and the third largest actor klaus angeles and san diego. i love to brag aboubeet and our companies creating the technology for energy sufficiency and smart grid an alternate energy services are going to create jobs but they can put those jobs in china, the philippines, malaysia, europe or they could put them in the u.s. and they make those decisions day in and day out so we are dependent in many ways upon the federal government. my prayer is that they just don't make it worse so we are not looking for a lot of help from the federal government but there are areas which would dilute the very important. there are areas which crow well into 2008 until the wonderful days of september 2008 when the capital markets crashed and lots of projects came to a hault at that time. we were still adding jobs well into 2008 but since september we have lost jobs so we have lost 50,000 jobs in the last year in san jose because there plaintext sector is not growing nearly fast enough to compensate for the other jobs being lost. that is the tale of our economy. we have been doing everything on the list you saw earlier that cities are doing, all of the above is what we have been doing over the years to deal with the problems. one interesting thing about dealing with those problems that i found from other mayors across the country is we are all problem solvers and there is no shortage of problems for us to solve, which is a good thing but when we solve the problems sometimes we do it in a way that people don't fully appreciated. we tried to lessen the impact of our people, try to spread it out and lessen it so it doesn't go to the core services, said this last year we covered a budget shortfall of $90 million, roughly 10% of our general fund and the only laid off a couple of dozen people so a lot of people think, what was the big deal? you have this big crisis but you didn't lay anybody off. we shrink by attrition so we are about 7,402,001, shrinking by attrition and occasionally laying people off. people by and large still don't i think accept the realities of things have changed especially in the local government finance. the mayors no lit bud it has not sunk in with our people yet. >> thank you very much. there is a lot to talk about there. rhamen manual famously said a year ago that crisis is a terrible thing to waste. you all have basically a spending side and a revenue side. let's start with the spending side. mayors myth mentioned things they had done in may subthat as a result of the crisis to change the way they practice government and i wonder if the of the three of you could describe a little bit what you are doing on the spending side of it that is different than just turning the notch another ten sense? >> i mean, we have been forced. running a city as i describe the other day to the local press is the toughest job at the worst possible time. you have to make the pay roll, you have to meet judgement-- and unfortunately they kind of don't get we have reduced the size of our city government by 3,000 position, the combination of full-time and part-time in contractor positions. yet, the local media from time to time when they would want to know how many people have actually lost their jobs? you should just lay off another 2,000 people. governments are very labor-intensive. it takes bodies and it takes individuals to make a place work so we left the number of positions vacant can move people in. as the chart indicated if the country is going to 11% unemployment, it is at 10.2? 10.2 now. we are at level 1 so verse why would i contribute my own problem by some merely laying off a bunch of folks? second is which services would you like me to cut? should we close our records department? should we close down the building that-- >> where have you managed to cut spending? >> we told every department he will have to find some quds there are some things we don't do like the streets apartment. we cut back residential street cleaning, just stopped it. we thought of it as millions, hundreds of thousands of trees and weeds to pick up people's leaves. we don't do that anymore. the recreation department last summer unfortunately, we have 76 swimming pools and we only open 40 of them. you would have thought that we just destroyed kids' lives in the course of this summer but we strategically placed them or reopen them all of the place, did some fund-raising the the public partnership as he mentioned. forces innovation for those cities are about innovation because we have to figure out how these still provide for the bulk of these services but rounding up tires and all kinds of things that we do. we told anyone if you want to have a parade a big celebration, pay for those services. we have been giving them away, hundreds of thousands of dollars in services. we have now said, you want to have a parade? you can have all the parade you can afford. [laughter] hickham b5 miles rivkin b5 blocks. this is what it costs, the bill the budget. >> i should have noted that although these cities are extraordinarily different in both where they are in their economy and where they get their revenue from in each of these four cities the mayor does not control those little things are helping us get through but clearly the consolidation, making do with less, capital improvements have been cut. we were building sidewalks to the turn of the million dollars the year. we are not doing it anymore. deficit and that is the city council recently authorized the staff to negotiate for 5% reductions in the cost per employee in order to save money and we don't care if it comes out of salary, benefits, whatever, 5% across the board. we have to negotiate with the ten unions to do that but the council is that we need to do this. the second thing council did at the same time was directs that to attempt to negotiate a second tier for retirement, so retirement benefits and health care for retirees have gone up dramatically in the last few years and we are getting ready this next fiscal year to write a really big check, a check the next year and the next year and the next year after that to cover the loss in market value in our pension plans. we have got to make that up. one of those wonderful if you have got them defined benefit plans for all of our employees. we guaranteed the performance of we get a right to pay the checks, we the taxpayers of that the crisis has driven us to seek another way so that is the interesting thing about it. i don't know if that is particularly innovative but it is the only thing you can do. >> let me pick up on that. i work in the newspaper industry which is somewhere between the worst of these cities and the ones worse than that. i have never in my career of 55 years old have a defined benefit pension plan. my pay has been frozen, my bonnet says think that in the cost of my health insurance is going up. i pay income taxes, property taxes and sales taxes to the district of columbia. how much longer can you pay municipal employees' pensions, which i know your predecessor's promise and it wasn't on your watch and health benefits, that are somehow protected from what is going on in the private sector, taxpaying lives of the people? >> the first thing i did last year in the first part of this crisis, the first thing i did was cut my own pay, took a 10% pay cut, cut the salaries of all my cabinet 5% and took five furlough days the last fiscal year and the current fiscal year everyone down to the level who is an exempt employee, not union because i don't directly controlled their pay. we then, we have four units, i cannot imagine ten a we have for unions. we have the hybrid a defined benefit defined contribution plan on the table. we are in contract negotiations right now. we are asking the employees, we want all new employees to going to the defined contribution plan. we want all the employees to pay more into the pension fund. we want them to pay more for their health care and we have for zeros on the table right now in terms of raises for these contracts. we have longevity increases. all contracts expire june 30. we are not required to maintain that. no one got a bonus after november's announcements so over time these pension changes if you talk to the actuary, you will generate a little bit of savings. >> this is for the long term. >> our pension system is less than 50% funded. i have more retirees than i do current employees. that is a guaranteed benefit to them. we have made that commitment. 27,000 total in the current workforce and they are expecting one so change has to come and this moment of crisis i think is going to force-- >> mayor wachter, the you have unions? >> we did not have been the union's however we are required with the retirement system, the state passed a law in 1988 saying they had to become part of the state's system. k grs, katechi employee retirement system and the county retirement covers cities and counties. it is a cadillac plan because of course at that time municipal workers were saying we really don't get paid as much as the private sector and so we are going to give you the benefit of better benefits. we have absolutely no seat at the table in terms of how the benefits are andel then held the entire fund its andel and as i mentioned earlier we must pay into that system, the state has had a shortfall. we are working with the state to try to get that changed. we have had some modification as we go forward but we still have a system where employers can retire. our hazardous duty is coming close to 47% of the cost of hiring an employee with retirement. what we did at the local level is we said first of all we are going to require all employees to make contributions to your health insurance and we also determined to years ago that we were going to put a cap on what the city paid into the system and we had our employees develop a group that actually managed our health care system, so whether it was through increased employee contributions or reduced level city's dwire citizens want? the day of having your street swept, is that something the city government, the kind of service which was expected and we have gotten used to end what we form cities for? that is really a challenge in what our citizens going to decide? >> doug elmendorf director of the congressional budget office the other day encapsulated the federal budget difficulty and i think a very compelling sentence which i can remember verbatim but it went something like, people in the united states have decided to demand from the federal government is certain level of services and then at that particularly the americans, that cost more than the amount of tax revenue they have been willing to send to washington. maybe i could start with mayor read. if you look ahead we saw in those charts something, we saw revenues rose in the earlier years and spending rate went right up with them and our revenues have fallen and obviously spending is going to fall. nothing we have heard this morning leads me to believe that the recession for municipal finances anywhere near over. do the people of your city understand that you are going to give them something less over the next three or four years than they are getting now or have you protected them from the harsh reality the way parents protect their kids? >> the people in san jose understand it because i have been preaching for a long time since i came into office and declared the budget deficit the public enemy number one, because the way it works, if you project it out far enough, the city of san jose will have one employee. he will be very well-paid but when expenses are going up-- i predict it will be a fire department battalion chief on overtime. [laughter] but, that is just inescapable and unsustainable. it can't be fixed and there are other problems at work as well just be on this recession and their structural budget deficit because the revenue structures we depend upon, the top three revenue sources are property taxes, sales taxes and utility tax. those three combined are barely enough to pay our public safety budget so we have got another 100 revenue sources we put together to pay for all of the parks, libraries and streets. if you look at sales tax, not on their reshifting from a goods economy to a service economy we are not getting the sales taxes off of the goods that are sold on the internet. we are supposed to, nobody pays the. were not collecting the sales tax and it is not going to grow the rate of the economy. property taxes are not going to grow at the rate of the economy. utility taxes, we are trying to conserve energy, conserve water. we have a couple of other taxes that we have the fee that is a good source of revenue because lots of cities dump other landfills. we are going to be a zero wade city pirg go right now we recycled 63%. what happens to the dumpty? it goes to zero so that is counter the health in the futures of that trend is continuing and that is a long-term scenario. >> mayor walker to the people in your town expect less services and the future? >> absolutely not. i think there is an expectation that somehow we can still cover those services. they want their leaves picked up. they want their streets web. they want to make sure the police and fire are there when they are needed. i think we have in large part created our own problem in that we are going to solve the problem. don't worry about it, we will take care of it, we will make modifications and i think now we have to say we are in this together and if you want to see us get through it you are going to have to be part of, you are not as part of the problem, you were part of the solution. >> i think the citizens have heard it from me so many times that i think the kind of get it but as the mayor indicated they still don't like it, and so unlike federal government, we see our folks in the supermarket , at the movies, walking down the street. we are not in these faraway places in state capitols and the federal government so we have to deal with them right there in a moment. the mayor asked a question about what is the proper role of cities. what is the proper role of the federal government? and, i mean that, by posing that question or even raising it i'm not saying the government should give us money at all. but they are things they can do to be helpful and supportive as again they have been with any number of other industries so i think the citizens again, the citizens of philadelphia know that i did not create the economic crisis and meltdown of the financial systems in the country and in the world. i was minding my business. picking up trash, filling potholes and the budget director came in one day and said we have no money. .. i guess i'm starting with their i want to or not. >> you don't have to. through a stimulus for us to stop the bleeding. >> you pay the first three years -- other way around. >> thank you, everybody for noticing. they pay the first three years. >> does that limit the number of cops you can hire? we have to go through the normal process and the cops would almost take two years before the literally get on the street because by that time you go through the hiring and training process and replacement process you are two years down the road. the other thing is it creates a dilemma is because our council struggled with the idea this is great to have the federal government play the lead to pay for three years of police officers. how are we going to pay for the fourth year? we've got another thing for the stimulus, assistance with to a new fire stations in areas that were growing quickly and the response times were off the charts. those buildings will look nice. we struggle with how do we put firefighters in there. on a day-to-day basis and has been a struggle. >> has the struggle trickled down to you yet? >> it's been minimum impact spent 10% of what we expect. there is a lag time in getting the money that the impact on the economy the federal stimulus is a very small drop. silicon valley economy is a capital we are part of it but it's really 40 cities spread across four counties and if you look at of the aggregate federal stimulus money that will come directly to the cities it is about $300 million over two years. our local economy to% of the national gdp and if you drop $300 million into a $300 billion economy it's not all that noticeable especially when you spread out over two years. we love the money and will take the money allotted to us to do projects and putting people to work and keeping people at work and those are all good things but in terms of stimulating an economy it's not a jobs program in the sense that i would say you would do if you are trying to create jobs and long term jobs. >> but if you have saved a job is someone not lead off because of stimulus or not? >> no, the money is going for special things, which we appreciate but it does not help us deal with our problem. >> every dollar that's come from the local government from the stimulus fund has gotten into the economy, the housing authorities putting new roofs of their units and new energy efficient windows. the local transit authority ordered bosses and those are on the way. we have gotten some cdbg funds we are using for example in small business development -- >> community development block grants. >> exactly. and we got notification our energy efficient block grants have come through, and as soon as we get the money that will get into the pipeline including small grants and some larger project grants. the difficulty is its kind of this huge amount of revenue coming and when we put the hose on it whenever trickles out at the local level has done great things. some of the state it takes a lot to manage the budget. we are happy with where it's gotten it is just a lot less than promised. >> by the cops program advocated for and the changes we are going to get 50 police officers. we can only use our cops money when we get back to a base line of strength, and unfortunately since we had the delay of class to save money in another one of the things we did we can't use the cops money until we get the number up to a certain level and then we can use it. i will give you a few numbers. we applied for and believe $310 million in funds. we have been awarded $157 million in funding cash on hand, about $14 million. again, one of these wonderful situation. the fed, as mesa, loved ara, keep it coming but there is a difference in the world between the award and receipt. they love of words. big press release, big announcements. i have a lot of letters. [laughter] that add up to about one wondered $57 million, by treasury is about 14. so just kind of getting it out and kicking it back out the door. excited about the program but on the year jobs if you were going to put money out there it's summer jobs for young people, it is a little bit of kind of wpa. if i could walk out on the street corner and say you five guys, do you want to work? got a job for you, media strips, all kind of things need to be taken care of. he went to work today, here is a job for you and its way to be around for a little bit. 24 guys just graduated from a solar panel installation program. i went to their graduation. almost all of them now have jobs in the private sector. so people are getting trained. these programs and solar and whether to to eight weeks. it is and some long drawn-out programs and the jobs out there in the grain economy for folks. but as tom harkin says not everyone is going to draw on tobacco. no one wants to be on the roof installing solar panels a you need to have a little bit of everything for a wider range -- >> to add on to what may year nutter said, if we get a stimulus to create jobs one thing in the cities and towns mayor walter says emphasized the city is where things are happening. 80 to 85% of economic activity in this country are generated within cities and towns. and what seem like if we are going to pump up the economy, create jobs we should go also for something that creates the greatest long-term return on our investment and we are not seeing that because if you put money where their real economic activity is it will have the longest term benefit and we are not seeing that. the cities are not getting a proportionate share which means economic activity isn't getting the investment would create long-term -- >> since a kind of general pattern here that cuts across all four of you is a bit of frustration in your relationship with the state government which is traditionally a major source of revenue to the local governments. it must be quite a challenge. can you talk a little bit about -- comco [laughter] -- what it's been like to deal with the state legislature and government budget in california and how that makes your jobs easier? >> i have been quote if you time saying the state of california isn't governable. i think there's plenty of evidence to support that position. and one of the things i've discovered we talk about revenue sharing in california it is a two-way street. [laughter] so when the state -- unfortunately we do have a sales tax that goes through sacramento we have a property tax that goes through sacramento and other revenue sources that go through sacramento and when the legislature in a few billion dollars short again they took local revenues all across the state and so we have taken a hit and i know that when they get back in the session again they will be looking at the user's tax which is another category they didn't take last time. so, it is a huge burden on the local government in that respect. but it's also a burden on our economy, the innovation economy and the technology where we are generating jobs because the state is a drag on the companies when they are making a decision about where to put the next factory, where to make the next investment they look to the state of california saying i'm not too sure that this state is governable. i'm not too sure about the future so that is another big negative on the column when they are evaluating the creation of jobs because they are going to create the jobs. will they be in california? i hope so but we have our problems. >> what is it like an arizona? >> we are having a contest with california to see which state government is the most dysfunctional. [laughter] and the cities, unfortunately, i think are in their third loss against the state legislature because it seems like in times of real budget difficulty things like the state constitution become a minor irritations. and you're experiencing the same thing in california. our state government has about 18 billion-dollar budget for this year, and a 3 billion-dollar shortfall for fiscal 09, 010 that they are trying to fix. they've done the same thing they have in california. it's been a more of an afloat in a down flow with revenues. and it's a challenge. the unfortunate thing it has really ruined in many ways the relationship. you know, cities are children of the state. we are a creation of the state. something the state legislators constantly remind us. [laughter] on the other hand, cities like to believe as i said before this is where things are happening. we are missing out because it is a constant fight. and i think that's been of real unfortunate thing certainly in arizona and i know california is our relationship in the cities and states is damaged irreparably damaged in many ways. >> and in kentucky? >> i think the biggest thing for kentucky is the state was very happy with a large portion of its stimulus money because it helped balance the budget. of course we don't have that luxury. the other thing we have is that the state, as a parent, not only ones to decide how we can raise revenue, they definitely want to control the revenue. they want to bring it through the state before it comes to the cities and of course they siphon off a portion of that for the of frustration and so you are kind of caught in this difficult position of you can't raise property tax above a certain percentage. we have no revenue sharing in the state. we are limited, cities of our size cannot have any type of sales tax or restaurant tax. so, they don't want to allow us the option of increasing our revenue streams because that may be construed as actually increasing taxes, and so, you know, you have got this kind of difficult situation of trying to be creative, but with one hand tied behind your back. >> what about in pennsylvania? >> fortunately the governor is a former mayor. we served together when i was in city council. that is on the positive side. on the negative side, it was actually pennsylvania was the last state in the country to have a fully passed budget. we were looking at california in the early summer and said well, you know, we will certainly be done before then. california got finished and we are sitting around, the governor got it done about a month or so ago. the state makes cuts that trickled down to us and has a broad impact especially for philadelphia and the counties are around us. kind of a five county region, all very dependent on the commonwealth of pennsylvania. property-tax is the primary tax for the counties around us, not for us. and so when a state makes cuts, counties have to raise their taxes. when our economy starts to go south, we drag them with us. and so, i mean, i think quietly many of the federal officials again would admit that running the bulk of the ara money through the states may not have been the best thing to do. it fits the largest state in the country. we have some states that have more animals than people with the governor has to take care of all of the family members and the general assembly. it's the largest general assembly in the country. it is a challenge. and, you know, it just makes you long for some old days of general revenue sharing, some targeted assistance, as the mayor said. if you really want to stimulate the economy, the fed gave a bunch of money to banks who now won't lend it to anyone because the need to hold onto it. god only knows why. [laughter] easily, a dozen projects that seized in their tracks and the private sector and education in medicine which has been the lifeline for us, 30% of the population works and education, medicine and related industries. they still want a bill and need to grow. if they don't grow, they die. but people to work immediately. we are expanding. a dozen hotels scheduled for some kind of activity. most of which got stopped dead in the tracks because they can't borrow money. want to put people to work? build something in the cities. real projects in the private-sector, good to go. everyone has an economic development agency, bankers, loan officers. you know, as they talk about the states, every bridge in the city of philadelphia actually goes somewhere. [laughter] >> they make a unique. >> so we don't have these kind of issues. our business, what we do is on the front page of whatever the appropriateness peter is. if city council -- >> so far. >> -- de lashawn a regular basis. you can't find 15 cents somebody wants you to explain it. if the in dustin cities and explain what it is we do we can actually turn this country around. >> mayor smith mentioned they are going to have a property-tax for the first time in mesa. quickly, is anybody else finding new sources of revenue in this crisis? are you doing anything? >> we scrub that every year and probably the new source of revenue is in fees and charges, so our planning, building and code enforcement is coded 100% by fees', fee-for-service. we can't raise taxes in california without a vote of the people. so it's a tough proposition. we are always looking at that but we rarely have the opportunity to put it to a vote -- >> by the way or property tax was voted on by the people. >> rejected the first time. >> have either of you found new sources of revenue? >> we utilize every source we are allowed by this the government at different levels. >> let me end with this one question to each of you and then turn to thei#lsxpgu ( '$su3's õp they are trying to catch up each of those could generate millions of dollars of private-sector investment in a lot of jobs. i have one company in particular a man of solar, one of our great solar companies produces the world's most cost-effective seóul herself. they have sold out their production for four years into the future. they need to deal a loan guarantee to get that because there's no place to borrow money. the capitol markets are not open for business to ordinary companies and investments. >> tobacco and ensure we will talk about this more it's all about capital. and i don't think -- i know we are not looking for a direct check from the government. we live and die by the economic activity within the region and our cities and the capitol markets being closed if the federal government can step in and either helpless director, help our business is open up the capitol market it creates the kind of revenue that we don't have to look at new sources. there are on tap to revenues may year reed mentioned the revenue tax. i think it is something we need to look up again because the world changes -- >> amine goods sold over the years? >> last year in mesa sales around christmas were down at our stores. i believe i read somewhere that the internet commerce was actually up. one area -- >> they will both be. >> i don't think it is going to change long term. i understand when it was imposed originally that it was a fledgling industry. we need to revisit that because there is a lot of revenue that historic week has stayed in communities that is now leaving our communities and we are starting to provide the same level of services. but capital -- retek advantage of the bill america long term program and is $812 million in interest. >> why don't you give the 25 description of what that is. >> basically the federal government subsidy that allows you to go out and float bonds and we save about 100 basis points on a regular bond offering. we were surprised because i was a very active bidding. >> the help to pay the interest on the bonds and you sold them at the taxable interest rate. >> the government subsidized difference and reduce our net interest cost which comes out of our general fund by $12 million. that's not a small amount and that is just on one issue. >> mayor walker? >> for us the biggest thing is the block grant program. whether it is the community development block grant which has a long history of being an effective way to get federal revenue into the local government and use it for everything from transforming rental housing into home ownership. we use it to create -- we created 34 new companies. small businesses. we have just helped build a transitional home for children coming out of the court system and also the energy block grant program. those allow the local government to determine how we can get not to balance the budget but we can get money into the local economy. >> from access to capital the same. just the ability for the city government. if we could borrow directly from the treasury, 30 year treasury rate, give you 50 basis points on top of that, the treasury is going to make a little bit of money. we have good credit because we are going to pay. we would save $132 million a year for 30 years. right out of our general fund. so i can not asking the federal government to give us anything. just help us save dollars, save as the same as they raised dollar for us. as long as we are not spending get somewhere else $132 million a year for that length of time right on the general fund will really solve a lot of problems as opposed to borrowing at six, 7% on the open market. >> okay. let's turn to the audience. we have some microphones. a couple of rules, wait for the microphone, say who you are. a question ends with a mark and we are going to try to avoid having all four mayor's answer every question so if there is one aimed at particularly one of them do so and if not we will figure it out. where are the microphones? why don't you start here in the ogle and then we will go to the gentleman for the next one. >> good morning, may years. i'm sure that you all -- >> you are? >> john from national journal. you all have talked about doing more with less and i sure you are. the question i would like you to look beyond your own city for a second, plight of cities in general and i was struck by this chart that showed this divergence between revenues and spending in the last three years that's really unprecedented. cities were spending a lot more money than they could reasonably expect to have gotten them revenue and that is a big reason for this whole you are starting out and as we embark on this kind of period of slow growth to come and i wonder if it could reflect on why it is that you have all talked about reinventing yourself and doing more with less. something changed three years ago were the cities decided that they were going to be spending a lot more than they could reasonably expect to get. there is a huge divergence. what happened? >> does someone want to take a stab at that? >> i can only speak from our experience. in arizona we are required to rather of a and balance the budget we can only spend what we collects. once again as a sales tax base budget you only collect sales tax as you bring in. we spent the boom times building reserves and not expanding services as much as we have so i don't know where that comes from because generally cities are the one level of government there is no plan be. we don't print money and we can't go out into the debt exit for capital items and so from an operational standpoint i am not quite understanding because every year we can only spend what we bring in. >> this must be related to bonding for long-term projects and clearly that is one of the things important for us as a local government is to be able to bond for our new brac center or a new fire center said that is the only thing i can think of. >> the question is whether the predecessors felt that the boom would last. >> the accounting mess everything up. [laughter] >> you will see increased spending in some areas that you don't necessarily want to spend money but have to. i don't want to spend more money on prisons but i have to. they are going to be fed and the need health care. unions get raises because people expect raises over a period of time. pension costs going up, double digit increases in the cost. there's virtually nothing i can do about them. so you're going to spend that money no matter what. >> the gentleman here in the blue tie. and then why don't you give it to the man on the other side right here in the blue shirt. >> im david perry from communications. i have a question for the majors. you can answer any way you want. i'm concerned about your relationship with the different mayors in china specifically cities like beijing. i know president obama was just there a couple of days ago. i'm wondering your population, we are talking about 1.8 million -- >> 1.5. >> and you probably have 500,000, about the same -- >> i've got a million. >> well i did some research on line and i found out that the city's minimum of 5 million people and so i am wondering are you guys in contact with the mayor? >> does anybody want to take a stab at that? >> we have a sister relationship with the city in southeastern china that we have cultural and other things, and we are constantly looking for economic development opportunities in china but it certainly hasn't risen to the level i think it can. once again, as mayor reed said one of the things the country as a whole has to realize is that this is a world economy. that sounds like old news, but i can tell you within our own business community here and we are really not totally up to speed with fact we are losing jobs, not that california, but to china, to singapore, to places like that and so i think we need to get more in line with that. >> my name is joe williams with the "boston globe," and i am wanting to ask about jobs. mayor nutter talked about briefly when he said five guys on the coroner who need work of the federal government would provide either founding or some kind of guarantee for a project you could find, moly put guice back to work but to get the economy growing and the infrastructure etc.. i was at an earlier seminar that talked about the need for the wpa style approach to solve the problem in the cities have not necessarily reaped the benefit. you guys all talked about it from the recovery act some of the money got there, not a lot of it, not a lot of it was creating jobs or stimulating the economy as much as balancing budgets. i wonder if you guys to talk about whether or not there is a need for a wpa style effort to get people back and where the government is to target that specifically at cities as opposed to just sort of sending the money out to work trying to expand them to parcel out. >> i think the key difference is that creates a job that's based on independent federal spending and when the federal spending goes away the job goes away. i don't think that is the focus ought to be on. i think the focus ought to be on spending money that creates jobs that will live on and spin off other jobs without federal government spending continuing on and that is what i was talking about the department of energy loan guarantees factories to create jobs and it doesn't matter with the federal government is doing next year because we already have the jobs. there's a lot of money for training people for green collar jobs. we need to create those jobs so there's some place people go to work racemic i think the block grant is ineffective tool to bring those jobs and to the local government rather than someone else deciding what kind of project needs to be done in a local community. >> previous city manager saigon michigan if you want to know what happens beyond the tipping point come to michigan as you all know. >> question is to talk about about a vertical relationships and what federal and state governments. what are you doing in cooperation? one of the big problems especially for core cities is the spread of government a local level and how that affected our cost. >> cities surrounding suburbs? >> exactly. >> one of the things we have done about the mayor's against we have shared a lot of information, we steal each other's ideas, give credit always where credit is due so mayor daley in chicago and in denver are kind of leaders in the area of natural caucasus and i brilliantly named hours the metropolitan caucus so it is a -- we are applying for ara grants as a region first time ever and we have virtually signed anything together for some kind of emergency management agreements, those kind of issues. we are doing it on the energy side in terms of transportation with our local transit agency as well as regional training programs and the grain economy. white house is very interested in promoting and supporting metropolitan area cooperation agreements as again we compete as a region. i came in office and said we are going to stop competing against each other. we are going to partner. so it is the thea lee region versus other parts of the country, other parts of the world. >> one thing we are doing in mesa we are part of what is called east valley of phoenix and there's a little for 1.5 million people in the cities of mesa, a tempe, gilbert. we do a lot of things together. the police operate a fusion center where they come together and do all of their activities and a lot of cross line utilization. also just recently for communities got together to sign the joint ambulance contract. in arizona the ambulance services are provided by private companies. so for communities can together to eliminate city lines to provide a much more efficient way to provide services at a much higher level and we were promptly sued by the ambulance companies. [laughter] >> you must be doing something right. [laughter] >> south central kentucky is brought to the other companies for economic development. >> where's the other microphone? why don't you take it to the back. >> i am konar doherty at "the wall street journal" to be given the number of fixed costs you are talking about, pensions, debt service, things that go on for decades i guess at least pensions should people just basically expect less of for more or less for the same, citizens, less services? meaning sort of academically if more of your money is going to go to a peace people don't see and then -- that's part of the conversation. part of the discussion at home is our pension and health care costs continue to rise. now, we are either going to make changes over there or you are going to have less service. it's literally the same pair of pants. some money in the left pocket and some in their white but it all adds up to bekp@ "daa (@ "up the unions as much more difficult to change the pension system to a second-tier. those are terribly difficult things to do. i believe they have to be done and they will be done. but that is not something that gets done -- >> a question to the gentleman there in the blue shirt. the highest hand in the back. stand up. >> i work on of rural development issues for the department of agriculture but my question is about health care reform. >> we are in favor of it. [laughter] >> i would like to know what percentage of your budget is, you know, spent on providing health care for employees. you said this is a labor intensive enterprise and a little back of the envelope calculation, but if say your health care costs were reduced by 50 per cent, which would put the united states on par with comparable countries around the world who spent twice as much now on health care as other industrialized countries. let's say we got to where france and japan and switzerland and england and you name it are and we are spending half of what we spent now on health care. would that do -- >> let me just -- the first part was how much of the budget goes to health care and they think if you could speak a little bit about what if anything you have been able to do to try and reduce the cost and into his question of if we sprinkled pixie dust on every health care budget and it fell by half. >> i will take a different spin on that. i honestly don't know what percentage. when 70% of your budget is personnel related there is a huge percentage of bills that go to health care but one of the cities crumble with as far as health care and that is mesa, arizona we have become the primary care physician, to a large segment of our society. when i was a kid 911 didn't exist and so when i had the sniffles or an injury my mom put me in the car and took me to the doctor. now people pick up the phone and dial line 11 and our paramedics' show up and a three quarter million dollar fire engine and provide them health care. then they are taken to the emergency room and whether they can pay or not they are provided health care. and that is the greatest strain on our economy is that we -- and that is one of the expenses that mayor nutter is talking about when someone files 911 we've got to show up and i don't care what you do, you are going to show up. as far as reduction in services what happens and what people in the cities will not recognize is that where we see the degradation of service is being closing polls that is what they recognize and understand but in reality our biggest threat is 911 caulkett answered in six minutes instead of four minutes and that isn't something noticeable unless you are sitting there with a heart attack that is the greatest threat is we are providing massive quantities of health care as city governments and people don't realize the millions of dollars we spend to take care of basic health needs for people. >> love to have that cut as i mentioned before pension and health care costs talk about a total context 25% of the budget. if we could see 50% reduction on health care costs it would have a pretty significant impact on our budget. >> we spent 75% of the general fund on people, the ones that deliver the services. that is what we are in, so out of the 75% 70% goes to wages, 20% goes to retirement and 10% goes to health care and some of their benefits. if we reduce the health care that helps it does not solve our problem. but the problem with both health care and retirement benefits is the rate of growth. if we look back over the last ten years in san jose, retirement benefits have gone up by an or than 100%. >> let's go back here and then the guy in the blue shirt. if you could stand. >> good morning. my name is james jones, a recent transplant from d.c. to boston and hopeful contributor to the administration's efforts on civilization and building partnerships with business and private sector and public sector and that goes to the heart of that effort to. mayor walker and the others mentioned the development of partnerships between the private and public sector. where do you see the greatest gain and how did you engage them or? >> private-sector. >> flexible with the small business development program we have got the housing authority which brought into the next kentucky university business school and this group of minority business owners creating small businesses. they've created 34 small businesses in the last four years. you look at the transportation sector and so began bringing the public-private partnership in. economic development is one way we are bringing people to the table and people are giving up a little bit more and expecting a little bit less so that we can all realize some improvement. >> server? >> this year the milken institute published a study on these sectors are not public, san jose metro area is still number one by a wide margin. but they describe the reason for that as we are a unique ecosystem collaborating entities serve a collaboration that goes on between government and the private sector education, non-profit is really important in the valley in the future so as a city we are working directly with industry. we have several initiatives underway in the region to collaborate around one of the impediments, what can we do, how can we move the industry at several ways to improve the economy. >> k-12 education is printed at the local level so regardless of how much control you guys actually have as mayors over that particular municipalities what are the innovations and the sort of solutions you guys are undertaking and for seat in the context of a kind of free conceptualize and the services you should deliver and doing it without making, you know, kind of broad cuts. >> just for our situation, i don't know about others, a primary funding source for public education at least in philadelphia as a state although we put about $800 million on the table ourselves from the city government property taxes. we developed a sugar service is kind of a joint steered service committee. we've wanted to examine the two biggest entities other than the university of pennsylvania. we have a lot of buildings, we buy a lot of stuff in many instances we buy a lot of the same stuff, and so how do we maximize that level of leverage for costs savings. the planning department's, if the school district is about to renovate or possibly build a new building what are we building nearby? should we be designing those together? and are we putting them in the place where there actually are people as opposed to historical there was always a school year. that's wonderful. no one lives there anymore. why would we put a school there or renovate the library? those kind of things. so a lot of planning activity that goes on between the city and school district in that kind of partnership. >> man here with a beard and finds a woman in the front. >> i am with just economics. there was talk earlier about re-engineering services, you know, meter performance, to find a better way, cheaper way of doing it. wondering if any of the mayors are taking the same approach with revenues. revenues could have different impacts in terms of their incentive effects or productive activity. donald shoup in california wrote a book recently called the high cost of free parking and he noticed in the certain parts of town where there is a lot of contestant actually by charging more for parking they get more turnover contador business revenue, or sales tax revenue, you know and people were going there but they decided i don't want to pay the parking fee so i will take transit. so you can reengineer your taxes and fees. wondering if you're looking at that. maybe in a revenue neutral way. >> just a quick example we did a little bit of that for two different reasons. one was for an hour of parking in many areas downtown center city philadelphia it costs about, it was the cheapest parking possibly anywhere in the united states of america we were almost giving it away. so we doubled the parking rates in center city and a couple of other areas. it has actually done exactly what you said. it did reduce some congested. it does lead to great turnover and the side benefit was some of the extra money actually not from our own pocket but another funding source so it worked very well. >> one of the reasons we moved from bowling green to los angeles is they don't have parking meters. >> one of the things we did on the revenue side is offered to airports in mesa, and you know, the way the government looks at revenue is much different than i ever looked at it when i was in the private sector. government flexible believes you can charge whenever you want and there is the market will absolutely accept what you do. the other thing is there was a disconnect between the consequences as you mentioned and what revenue you're charging for excellent airports we were renting space without trying to figure out how did that fit into the overall economic development? our revenue we look at as first baala our basic source of revenue has to be approved by the voters so there's nothing we can do that is that short-term but the things we can affect such as fees and rentals and things like that, we have tied into an overall economic model to try to create this long-term stability recognizing that our financial strength i believe comes from our overall economy in our city. and so we have done little things that have created business activity. so we have started to look at revenue differently. but, you know, it's incremental because the base revenue has got to go to the voters and get an increase, the property tax, not property but sales tax or whatever so you can look at it in the fringes but it is not going to solve -- >> why do you have to airports? >> wide b have to airports? why did we get to airports, we of the general aviation but also the most successful base closure, former air force base, phoenix mesa gateway airport which was a training center which has been turned into a or turning into a reliever airport. >> valerie, and love our comments today have been focused on what is actually happening in the economy which is really affecting what is going on but i wonder if you could talk about how much the challenge that government at any level face is sort of a secular mistrust of what government does or people's inability to really understand what government does for them so it goes back to david's quote that people want things but they are not willing to pay taxes. so our tv, which alleges that he faced or think about in gauging the public on an importance like public good or shared responsibilities, and is that -- does that resonate with your citizens? >> i just had the most bizarre said conversation. i was out and even a couple of days ago and this was actually with a woman that i know and as i mentioned earlier we cut out a leaf collection. we loved trees and we plan to come everybody loves trees. we said it's a $400,000 service, twice a year. we can't afford to do this anymore so we are not mechanically picking up your sleeves. the estimate my constituents want this, as a local neighborhood political person. we can afford it. i would love to engage in this conversation but we can't do this anymore. we are doing police, health, doing this, we don't get anything from the city. if you call 911 a police officer or firefighter is going to show up. did you turn your speak on this morning? water came through. rex centers, libraries, i go through a laundry list of stuff. but you're not been to change the policy on the leaves pickup? i said no, we are not doing it. maybe you didn't hear my last vehicle last press conference. we have no money. it was bizarre. [laughter] >> if you cut spending so much he would have money. [laughter] >> there is a lot of disconnect because people tend to be focused on a special interest that they have and they believe is we have problems but you can find a little bit more money -- >> there is that problem with the conception how we spend our money, what i want to do in the next budget is put a line item for waste -- $10 billion the budget process cut that. [laughter] [applause] >> he had a partnership with us in kentucky univ. and we used the we've pickup they sell it as a revenue source. with regard to engage in the public weal of citizens up in arms because we were expanding the school that resulted in the closure of an indoor pool and so they wanted to know what we were going to do about it and so what i did is it o.k. let's talk about the alternatives, let's see what we can do if you would like to be part of a group that explores alternatives, let me know. e@"d's)p$a@ ! h,pka ',kgugs ' >> line with the susquehanna group and i was wondering if the context of this discussion about job loss and on employment whether or not you have used strategies aimed out of work where the unemployment is even higher for adults. >> one of our successful stimulus programs was this summer. that's the first money we got spend for a youth program. so we've got 1,000 kids, 1524 typically low-income and have some other problem in their life to qualify for the jobs to be employed and spent the stimulus money. it was a wonderful job but it's a summer job and now they've got to go back to school or whatever they were doing. but the federal money is helpful but we don't have a separate program for youth and in a planet. my program is creating the jobs because the jobs the kids will be able to fill. >> anybody else? >> one of the unfortunate things not having enough money is we place our work children which are number one most at risk and number to keep worst investment we make is not spending on our children because our police department will show up and say please have a summer job, and after school because we will spend the money. it will be much greater and you will spend my department rather than that so that being said, since we once again it's a mathematical issue, revenues and expenses we've teamed up with our school district to try to get a long-term approach to things. and education, the way we are going to raise our youth and community is to raise the educational level and get those kids who are dropping out and those who are not moving on to college which there is way too large of a percentage into training programs and higher education and get that going because we see the long term, that's the best kind of youth program we can have. >> we will call it private partnership and i use some of my experience with fund-raising to spend months filing with the corporate sector, $1,600 you can employ a kit for the entire summer. some gave more, didn't necessarily take all the kids themselves. we spent money in the city government, used some government money last summer suite 1500, 1500 kids summer jobs through the private sector. >> i'm afraid that is all the time we have. "the wall street journal" had a conference the other day of ceos and one of them stood up and asked rupert murdoch what he felt was wrong with political discourse into the united states. i think that he might have had fox news and mighty of the response was the problem was we don't have enough good people running for office in america. i want to ask you all to thank these people not only for their time to read these are obviously for people we are lucky to have in public service. [applause] i just want to echo david's remark that was a phenomenal panel and we are now all going to hear from jared bernstein and before i introduce jared i told him i was going to give the headlines from this morning's conversation so i think it was david who said the recession may be over but the recession and municipal finance is far from over. i think it was mayor smith from mesa whose budget offer said we hope that next year is as bad as that year. dow will be good. mayor read from san jose flat is the new opera. [laughter] mayor ara had so many things that he said. but i think one of the critical things that he said is we obviously decided that financial institutions or some of them were too big to fail cities are too important to fail and particularly focus as we just discussed on access to capital as a critical issue. and mayor walker from bowling green i thought really made some very salient comments several times about the need not just to think about cutting services or modifying services but citizens adapting their behavior in many different ways. this has been an excellent conversation this morning and what i would like to do now to give the administration perspective on this and again, you are among friends, there is an enormous amount of recognition of the administration has done throughout this entire year. jared bernstein is the chief economist and economic adviser to vice president biden and also the executive director of the middle class task force that has been created by the president and chaired by the vice president. many folks in this room know of his work at the economic policy institute here in d.c.. he was wildly looked at in washington before going into the administration as one of the most respected experts in the country on income and the quality and trends of employment hurting on low-wage markets and poverty etc., etc.. jared bernstein. [applause] how come he didn't have to wear a tie. [laughter] it's an honor to be back here at brookings. thank you, bruce at the metropolitan policy program for hosting this defense. i see many old friends. it's great to have the chance to address this high caliber audience about the economic challenges we face tall levels of government, national, state, local. i am especially happy to be here local elected officials, and i bring the mayor's greetings from my boss, sheriff joe biden. he wanted me to tell you he will be calling soon to catch up on how the recovery act is working out. i want to give a special shout out to major ara from philadelphia who played a key role in our first middle class task force meeting in philadelphia. on reading job opportunities in major metropolitan areas and do you realize that was only nine months ago? it feels like ten years. i don't know if that means time is going slowly or quickly. it seems like a long time. by the way, just to bring you back to that discussion the deep economic analysis on metro conditions, fiscal challenges are fine but i ask you, mayor nutter have you begin to work on that inexplicable market failure i discussed with you may delete the backend date to be wary which is why i can get an excellent bickel and slice of pizza in pennsylvania but not d.c.. [laughter] >> bruce, surely this is a questionable the of the massive brain power bruce commands. so i don't know why we haven't looked into that yet. in a number of recent discussions i and other members of our economic team at the white house have talked about the depth of the recession we inherited, and were interventions and how they have helped and how the president's longer-term goals such as health care and energy reform are so critical to both generating a lasting and probably shared expansion while meeting our long term fiscal challenge. i will summarize some of those issues in brief but i think this audience by now is well versed in the discussion so i would like to stick more to the topic at hand, local economies and try something maybe a little bit different. i found the background paper i read for the meeting quite interesting and i would like to plumb some of the issues raised in the paper. mostly by asking questions of the experts in the room, i realize usually you ask me questions and we are going to have time for them and i look forward to it but i also wanted to ask questions of bruce and mark and the others who wrote the background paper which i felt very well done. i'm going to ask about some of these issues and i wanted every crystal clear in my old job at epi i was supposed to go out and make news in my new job i'm supposed to go out and not make news. i would be very clear our administration is not endorsing any of the ideas i'm going to be asking about. i am merely tapping their eminence which at this point are nothing more than shards of what is left of my inner think tank. but this is, neither is this idle chatter. on the economic team we have marching orders from the president to put all good ideas on the table so i hope he will entertain questions from me about the forward leaning ideas in your document. first let me say a little where we are focused on the job market in the macroeconomy. it is an interesting frame, job market, macroeconomy because they are not working in synch right now. thanks in part to aggressive keynesian stimulus including tax relief, deep investments in the safety net, infrastructure projects, fiscal relief for strapped states, investments in innovation, all implemented with great care and here for unforeseen transparency the economy is pulled back from the brink and fear of depression has been replaced with ho for recovery. this historical intervention recovery act is highly germane to our meeting today and i will come back shortly. but both the treasury and federal reserve have been equally aggressive in credit markets and their actions have helped stabilize this critical component to our economy. help for struggling homeowners along with liquidity injections into the primary and secondary mortgage markets have helped keep mortgage rates lower than they would otherwise be and carve out what looks like a bottom and home sales and prices. all of this is true and more after plummeting by over $12 trillion since 2007. household wealth finally began to stabilize in the second quarter of this year rising by about 2 trillion as real-estate values flattened and markets began to recover from their collapsed during the credit crisis that began last year. this trend reversal and equity markets that began in early march of this year lifted the typical 401k by about 45%, not enough to make up for the losses but enough for many of us to be willing to at least consider opening the envelope containing the statement once again. if you read the documents from today's conference you get a vivid sense of how far we have to go and i think that was part of the theme in the last session. fiscal imbalances of the state and local level are one of the key points of discussion today. i was also very interested until long lags that these analyses documented between the broad recovery and local fiscal recoveries. i take note in the survey by the league of cities it shows cities most common response to a fiscal crisis was work force reduction. at this point is typically noted the stock market needs, the job market lags a slightly more sophisticated take might offer the following which i actually think is a little helpful dangerous sport. as a matter of fact, everyone that watches it, knows it is a dangerous sport. and there should be no surprise when a football player separates his shoulder, twists an ankle, or busts a knee. but over the past several years, an increasing number of retired plarets have developed long -- players have developed long-term memory and cognitive diseases, such as dementia and other diseases. and -- it comes much later than after their careers end. shaft, sometimes it is in the even detected you believe the autopsies after their death. and these are -- these are not the types of risks most players or their families ordinarily associate with the game of football. as the -- the national football league is a monopoly -- monopoly by way of congressional sanction and 190e, and whose existence was legislatively sanctioned. the causes and pervasiveness of these football injuries warrant federal scrutiny. and i say this not because of the impact of these injuries on the 2,000 current players and the 10,000 retirees associated with the -- with the football league and their families, i say it, because of the -- of the forget on the millions of players that the college and high school and youth level. my 13-year-old son plays a game at 4:30 at cranbrook today. the questions before us are several. how serious is the problem? what can be done about it and where do we go from here? and there appears to be -- growing evidence that playing football play be linked to listening term brain damage. for example, a 2003, university of north carolina study found that professional players who suffered multiple concussions were three times more likely to suffer clinical depression than the general population. and a follow-up study in 2005 showed nfl players suffering concussions had fine times the rate of cog knitive impairment and retired players were 37% more likely to suffer from alzheimer's than the population as a whole. and earl here this year, the university of michigan released the study that found that 6.1% of nfl players over 50 years of age reported they had received a dementia related diagnosis. a statistic five times higher than the national average. and players aged 30 through 49 showed a rate of 1.9% of dementia related diagnosis. 19 times that of the national average. last week the "new york times" prepared an analysis of the data from the nfl's man to reimburse retired players for dementia related medical expenses, which found similar data, medical researchers also cite autopsies performed on numerous former nfl players who following their death were diagnosed to be suffering from c.t.e. brain disease and some of these diseased players, we remember. mike webster the 50-year-old, nine-time pro bowl center for the steelers. he died regrettably a pennyless wreck clues, sleeping on the floor of a pittsburgh train station. and terry long, 45-year-old ex-steeler who died after drinking anti-freeze. and andre waters, a 44-year-old former safety, for the philadelphia@@$rr"' and the national football league is performing its own long-term study, and has -- has largely sought the -- to discredit these reports or some of the conclusions drawn from some of these reports. the football league described the -- the reports as flawed. and dr. ire are cassen, the cochair of the nfl mild traumatic brain injury committee denied the linkage on six separate occasions. when asked whether there was any linkage between playing football and c.t.e., dr. cassen stated it has never been scientifically validly documented. and the league said that the recent university of michigan study was flawed. and that further study was necessary. and the new york -- the new york times data -- released last week, was -- they said, for self-promotional and lobbying purposes, of the union. given, there's no consensus between the league and the players and the medical community about the causes of these cognitive disorders, it should come and no surprise that there is little agreement about how to respond. former players believe it is unconsheppable that the current disability plans only permit a full disability award for conditions developed within 15 years of retirement. such a limit, they argue, makes no sense for the diseases that frequently take more than 15 years to manifest themselves. player advocates also ask why there hasn't been more done to limit the likelihood of long-term brain injury. and for example, giving the players' association input in the selection of team doctors and trainers. and -- and granting players unlimited access to their medical records. and requiring that all -- injuries be reported to the league and the players association. and limiting the frequency of full contact drills, to cite some of the -- of the possibilities that exist. the nfl responds it is set up and no fault compensation scheme paying ex-players with dementia up to $88,000 a year, and has instituted rule changes to the -- to limit serious injuries and develop standards for concussion management. and however, when it comes to making further changes in its disability plan, to account for long-term injuries, the -- the nfl asserts that that is a subject for collective bargaining. the answer on how to resolve these differences and where we go from here, is -- is -- the realization that we need an expeditious independent review of the data and so i'm asking all parties and their personnel to make their -- their record available to us, to permit such review and analysis. of of the -- the request goes to nfl and nfl p.a. and relevant medical researchers ncaa and the national federation of state high school association. now when it comes to -- to public health issues, i do not believe it is adequate for the league or the players association to hide behind a collective bargaining agreement. and sure liane $8 billion a year industry can find it within its budget to make sure players are adequately protected and that any victims of long-term brain disease are -- are fair my compensated. the seriousness are life and death issues. they go to to the heart of our nation's most popular sport and equally important, they affect millions of players of all ages and their families. i like now to invite our distinguished ranking minority member, lamar shot for his opening remarks. >> thank you. mr. chairman, the recently released university of michigan study of retired nfl players indicates that overall retired professional football players are in fact in good health. and the "new york times" has sutted that this study also points to higher than normal rates of dementia or other memory related problems among former players. but the study does not support that view and prior studies have been argued to point both ways. and while we need to take this issue seriously, we should not jump to any conclusions. and as the lead author of the michigan study la stated, quote,, the study did not conclude that football causes dementia, end quote. high my publicized claims that the link is supported largely is a result of misreporting of the studies. they have drawn this to the "new york times" time attention. the author stressed they do not believe, quote, any responsible scientist would conclude from the study that retired football players had higher rates of dementia than any other group, end quote which was alleged by the "new york times." and mr. charpe, i like -- i like unanimous consent to put a letter to the "new york times" from the -- >> without objection, ordered. >> and thank you. >> mr. chairman, the authors also underscore that, quote, the comparison study used for dementia understates the true rates in the american population. end quote. in your own words, according to the authors themselves the rates for retired layers are likely comparable to the american population in general. and so we need to be careful about what conclusions regarding dim men aer 0 memory problems we draw from the most recent look at retired players health. professional football is the most popular sport in america. it is important the league and the players make every effort to make pro football as safe as reasonably possible. the nfl should continue to study the potential long-term effects of head injuries on player health. the league should also study whether equipment improvements or stricter rules enforcement could reduce long-term impacts of head injuries. and of course college and high school officials should do the same. congress should not attempt to influence the upcoming collective bargaining process, the nfl, and its players union are about to undertake. we should also avoid the temptation to legislate in this area. and football, like soccer, and rugby and even basketball and baseball involves contact that can produce injuries. we cannot eliminate regulation without eliminating the games themselves. and the retired player study concludes, the study finds retired players to be in good stead, overall. and their history of physical fitness shows up in lower rates of diabetes and cardioraz klar disease. playing in the nfl, was a positive experience for most retired players. and congress can highlight the potential long-term consequences of playing professional football through hearings like this one. but the nfl does not need congress to referee this issue. while many would say we're fans of football, monday morning quarterbacking doesn't qualify us as experts. both teams are at the table here today, or we'll be -- will be shortly and we should work together to find a solution where both the players and the league win. and mr. chairman, i look forward to the witness' testimony and hope that this hearing will result, nee neither in expadge rating the problem of injuries nor in downplaying the need to look if ways to reduce injuries. in chairman. thank you. >> thank you very much mr. smith. and did jim brown -- of cleveland come in yet? out of the -- of the natural generosity of my heart, i'm going to allow three people to make two minute statements. miss baldwin and mr. quigley and hank johnson. if you agree to that, you'll be recognized. so we'll start off with -- with tammy baldwin. >> thank you. >> i want to thank you for holding this important hearing, as well as extend my thanks to our many witnesses who have taken the time to be with us this morning. and i also want to acknowledge the presence of mr. willy wood, a retired nfl player from the green bay packers. as a proud packer fan, i will -- would like to boast for a moment about mr. woods. he made the all pro team nine times in his 12-year career and played in both super bowl number one in 1967 and super bowl number two the following year. and thanks in no small part to mr. wood's impressive work as a starting free safety for the packers, green bay won both of those super bowls. he finished his 12 nfl seasons with 48 interception which is he returned for 699 yards and two touchdowns. and mr. wood was inducted into the pro football hall of fame in 1989. and mr. chairman, i know that wisconsin people and packer fans across the country are grateful to mr. woods for an incredible career. while we know what an outstanding player he was during his sheens with the nfl, i think there's less awareness of the hardships that players like mr. woods endure later this life because of a lack of health care coverage. mr. wood is currently living in an assisted care facility and his nhl pension of a little over $1100 a month is not enough to pay his bills. all though he hat beneficiary of when is known as the 88-man these funds are often not enough to cover izz his monthly medical care. so mr. woods relies on the charity of others. these situations are not uncommon among former nfl players suffering from disabilities and dementia. >> we have lots of questions and that's why we're having this hearing today. i look forward to learning more about the issue from our expert witnesses. and mr. chairman, do i ask unanimous cannot sent to to submit for the record, an cle called offensive play in the new yorker. >> we would be happy to introduce that into the record. >> dan lundgren. >> thank you very much. i make several points. i appreciate this hearing although, i'm surprised that this hearing takes precedence over us reconsidering -- the major elements of the patriot act, which have to be determined in our effort on the war on terror, before they expire. secondly, i must say i had good fortune of getting to know john mackie through jack kemp and have seen the deterioration of that great man, a leader in the nfl, and the players' union and -- believe that an investigation of the kind of injuries suffered in the nfl, and other -- other levels of football is appropriate. and third, i hope that -- that beyond everything we're dealing with here, that -- 0 the greatest thing that could come out of this, is serious stud expris as to the impact of the use of equipment, the head as a weapon in football, and the rules to protect players that will not only affect the nfl college but high school as well. and -- and too often i hear on television commenttators talking about the great hit and you examine the hit, and it is often a hit used with the head or not an enforced rule against head hits. both on the pro and the college and the high school level. and if there's any one thing we could do, it would be to show that it is not a game to destroy people's brains with respect to the misuse of helmets and the misuse of the head, during football. i love football, i grew up loving football. and i happen to go to notre dame. i know a good number of guys that played in the nfl. we ought it face facts. football is a great game, but using the head and the way it has developed with the protection of the helmet, people understand, you don't have to worry about breaking teeth anymore and breaking jaws. but because we have that comfort too, too often the helmet, in casing the head allows players to believe they're invulnerable because we can't see the injury. the injury is

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