New Jersey municipalities must act
Tuesday, December 30, 2008
BY WILLIAM G. DRESSEL JR.
Tthe Times of Trenton Op-Ed published, December 30, 2008
Every day, New Jersey municipal elected officials see and hear about the effects of the economic crisis on our communities and our residents.
As of October 2008, the number of American homes in foreclosure stood above 2.2 million. Record numbers of hard-working families remain at risk of losing their homes to foreclosure, and those who are not at risk are seeing their home values decline.Retirement savings aren't safe, either. Families have lost as much as $2 trillion -- or about 20 percent overall -- in their retirement plans in the past 15 months.In the last 10 months, our country has lost more than 1.2 million jobs, and the official unemployment rate jumped from 6.1 percent to 6.5 percent. Other indicators show even greater labor market weakness.
Clearly, our families, our home towns and our nation are in economic crisis.
And it is in America's home towns where we can find solutions. Municipalities can be the economic engines of our recovery.
Following a holiday recess, Congress will return to Washington Jan. 6, 2009, to begin work on a comprehensive economic stimulus package with the goal of having it ready for President Barack Obama's consideration shortly after his inauguration Jan. 20. The legislation is being drafted now. However, the spending level and the specific elements to be included are still being debated. Since the final measure is still being developed, there is time for us to convince Capitol Hill to include programs in the package that can make a difference in our home towns.
Public infrastructure investment not only creates jobs but generates a healthy multiplier effect throughout the economy by creating demand for materials and services. The U.S. Department of Transportation estimates that for every $1 billion invested in federal highways, more than $6.2 billion in economic activity would be generated. Mark Zandi, chief economist at Moody's Economy.com, estimates that every dollar of increased infrastructure spending would generate $1.59 increase in GDP (gross domestic product).
By comparison, a combination of tax cuts and tax rebates is estimated to produce only 67 cents in demand for every dollar of lower taxes. Thus, by Zandi's conservative estimates, $150 billion in infrastructure spending would generate a nearly $240 billion increase (or close to a 2 percent increase) in GDP in the first year. In addition to short-term infusions, infrastructure also has long-term effects brought out over a number of years. It increases America's competitiveness by providing the necessary components for business development and job creation for years to come.
New Jersey's municipalities call upon the federal government to include funding in an economic recovery package that would accelerate infrastructure investments through programs like federal highway and public transit programs, Amtrak, the Airport Improvement Program, the Community Development Block Grant Program, the Energy Efficiency and Conservation Block Grant Program and the state's clean water and drinking water programs. Investment in ready-to-go infrastructure projects -- including funds for airports, housing, highways, bridges, transit, clean water, sewer, communications technology and schools -- creates jobs and stimulates the economy.
We also ask the federal government to ensure that state and local governments have access to the capital markets. Because of the national credit crisis, local governments across the country are reporting difficulty selling bonds and accessing short-term credit to finance everyday local government operations.In a hometown stimulus package, we are calling upon Congress and the president to extend Treasury and Federal Reserve authority under the Economic Stabilization and Recovery Plan to ensure not only that state and local governments have access to the capital markets, but also to raise the bank-qualified debt limit from $10 million to $30 million, which will allow small issuers to place their issuance directly with banks.
Bringing a stable economy back to our nation, back to our home towns and back to our families is the first of many important steps that all levels of government must take to build a better future for the nation's home towns and families. We urge Congress and the president to act quickly to create good jobs and to help our families. Local officials stand ready to go work.
Given the president-elect's commitment to help us, the League of Municipalities has asked New Jersey mayors and municipal clerks to complete a municipal stimulus package survey. Once the league has compiled a list of vital projects ready to go, it will share the information with our U.S. senators and congressmen to assist them in efforts to help New Jersey with federal resources.
This global economic crisis, too, shall pass. And I am certain it will pass faster in our state if all who represent New Jersey citizens -- in Washington, in Trenton and in our home towns -- all work together.
