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 citi