Cut Short Cities feel the pinch as relief funds go to states instead.
Opinions expressed by Entrepreneur contributors are their own.
This year's tax bill included many financial goodies forentrepreneurs, but fiscal relief to ailing cities where businessesoperate wasn't one of them. An earlier version of the Jobs andGrowth Tax Relief Reconciliation Act of 2003, passed last spring,included $4 billion in direct aid to cities. The provision waseliminated during negotiations, and $20 billion in aid went tostates instead-with no requirement to share any of it with cities.The move has outraged city and county leaders struggling with theweak economy and homeland security costs. John DeStefano, mayor ofNew Haven, Connecticut, calls cities "engines of the nationaleconomy" in need of economic stimulus. Any decrease in servicehurts business development, whether it's lack of consumerbuying or weakening infrastructure that can't transport goodsefficiently. Local efforts to close budget gaps with higher feesand other revenue generators also eat away at business profits.
Counties around Greensboro and Winston-Salem, North Carolina,have seen a modest jump in property taxes and fees, says DonKirkman, president and CEO of Piedmont Triad Partnership, aneconomic development agency in Greensboro, "but not of amagnitude that will impact the attractiveness of this area."Kirkman says the region's low tax burden and financial reserveshave mitigated the impact of the current downturn.
Boston should be so lucky. According to Howard Leibowitz, themayor's director of intergovernmental relations, the state ofMassachusetts has already used $55 million of $550 million in aidto balance its 2004 budget; the rest is held in reserve."Virtually nothing is going toward the original intent-to helppreserve services at the state and local level," hesays.
To many observers, the tax cuts (which apply until 2010) andenhanced write-offs for software and business vehicles outweigh thelosses to cities and counties. "The best thing the federalgovernment can do is stimulate growth," says R. Glenn Hubbard,an economics professor at Columbia University. A city aid packagewould produce less impact, he says. "The notion that aone-time federal fix would help isn't accurate."
