City facingaid squeeze

Posted: November 23, 2010

THE AGING and well-worn City Hall SEPTA station, where Philadelphia's two major subway lines intersect, hasn't been overhauled since it opened to passengers in 1928 - during the presidency of Calvin Coolidge and a year before Wall Street's Black Friday.

Now, 82 years later, SEPTA has a $100 million plan to build an entrance to the station from Dilworth Plaza, on the west side of City Hall; to make the station more accessible to the handicapped; to widen narrow passageways, and to add art and architectural flourishes.

But agency officials worry the City Hall project will fall victim to a new age of austerity. In the wake of this month's midterm elections, Republicans who had promised steep budget cuts are positioned to take control of Harrisburg and to wield more federal clout in a GOP-led U.S. House.

Experts and top officials in Philadelphia - heavily dependent on federal and state dollars for mass transit and other infrastructure projects, for its safety net of health and welfare services, and for much of its schools budget - are worried that lawmakers will place a heavy burden on cities, and especially on the City of Brotherly Love.

"The dominant discussion, as of today, is that the United States needs to tighten its belt and go on a diet," said Bruce Katz, founder of the Metropolitan Policy Program at the Brookings Institution think-tank in Washington.

He said the ramifications for Philadelphia could be many - from fewer federal research grants for the city's major universities to growing talk of eliminating the mortgage deduction as part of a long-term deficit-reduction plan.

As 2011 looms, much has been made of Philadelphia's diminished clout as the city's political lions, Gov. Rendell and his longtime neighbor Sen. Arlen Specter, prepare to leave office - while a power shake-up in Harrisburg has stripped state Rep. Dwight Evans of his leadership role, in which he steered millions of dollars here.

But the real damage may not come from the loss of clout - but the loss of cash.

Philadelphia's diminished influence could not come at a worse time - just as lawmakers from a resurgent Republican Party are looking for ways to make good on their 2010 campaign promises to seek balanced budgets through steep spending cuts without raising taxes.

The Republicans preparing to take office or take a lead role in the 2011 budget process say that their goal is not to cause pain but that steep reductions to many programs are necessary to rein in out-of-control government spending. In Pennsylvania, Gov.-elect Tom Corbett made budget cuts the main message of his campaign, and he won handily.

"Because of the economic challenges that we have right now, we probably have the greatest opportunity since the '80s to get [spending] under control," Corbett told reporters outside a Republican Governors Association meeting last week. "We have to be responsible again."

In Washington, Republicans, who take control of the House and gain six Senate seats in January, have said they will return discretionary federal

spending to 2008 levels, which is an immediate $100 billion reduction, and have talked - without offering specifics - of further cuts.

In Harrisburg, Corbett, who signed a campaign pledge not to increase any taxes, faces a budget gap next year estimated as high as $5 billion - which is more than he could get back in his plan to sell the state's liquor stores to a private entity.

In Philadelphia, officials are bracing for a hard impact.

Many local officials fear another period much like the Reagan era of the 1980s, when spending on urban aid was cut dramatically - one of several factors that pushed Philadelphia toward the brink of bankruptcy by the end of that decade.

"The big question will be the battle within the Republican Party," said Nutter administration aide Terry Gillen, who recently took over federal lobbying efforts. "The tea parties are focused on the deficit, but they will clash with the classic Republicans wanting to cut taxes."

Whatever the outcome of the political wars, the reversal of government policy may seem even worse in Philadelphia because over the past two years, the city has done so well in receiving money from the roughly $800 billion stimulus package approved at the beginning of Obama's presidency and in spending those dollars in a timely way.

Overall, city and local authorities have received or signed contracts for much of about $1 billion that was slated to come here through the federal program.

For example, the Philadelphia Housing Authority, which officials say has received as much as $127 million in federal dollars, is building or renovating about 1,200 units.

Philadelphia has spent so much of the promised federal money that officials seemed unconcerned about proposals by some Republicans for the new Congress to kill the rest of the program and reclaim any unspent dollars.

But the future of economic-stimulus dollars is just one area in which the new environment is worrisome to officials. Others include:

* Social services: Donald Schwarz, the city's health commissioner and deputy mayor for health and opportunity, estimated that as much as $2 billion of the $2.6 billion annual portfolio he oversees in health, human services and programs for the homeless is through either state or federal dollars. A number of these programs are mandated, but some - especially in areas such as child-health services - are discretionary and will likely face cuts with the state budget gap.

"I'm worried that if many of these programs go away, we'll see more people on the streets, more children on the streets - which we don't see right now - and more people in jail because there are no alternatives," Schwarz said.

* Transportation: SEPTA officials said that as many as 22 major capital projects - such as the one underneath City Hall and major work at the Wayne Junction overpass - could be in limbo while the austerity-minded Congress debates a new transportation bill, with the current program expiring next month.

SEPTA officials said they are already anticipating reductions of $110 million in funding for large projects and fear an additional $16 million to $20 million in cuts under the GOP plan to return federal spending to 2008 levels.

Bob Borski, the former Democratic congressman from Northeast Philadelphia who is now paid to lobby for the city, is glum about the debate over a new federal transportation bill, which would also fund urban highway projects.

"Clearly the only way to get a bill is some increase in taxes," Borski said - something Republicans have pledged not to do.

* Education: The Philadelphia School District will be watching budget developments closely in Harrisburg - the source of roughly 55 percent of its $3.2 billion annual budget - and in Washington, where a fight looms over reauthorizing the No Child Left Behind program that has funneled millions of dollars to Philadelphia and other urban school districts since its launch in 2001.

Donna Cooper, who's worked as a top aide in City Hall and to Gov. Rendell in Harrisburg and who just started work as a senior fellow with the Center for American Progress think-tank, notes that there are other threats to Philadelphia - especially if GOP lawmakers move to cut off the Fannie Mae and Freddie Mac housing corporations. She said that the two quasi-governmental programs support about 40 percent of mortgages here, and that home construction remains a big driver of jobs here.

But Cooper also said that any steep cuts to health care on a state level could unite Philadelphia legislators with rural counterparts who are also dependent on such programs. Said Cooper: "The cuts to rural Pennsylvania are even more direct, and so there's a natural alliance [with Philadelphia] there."

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