The City of Memphis is in the throes of a budget process that will produce a proposed budget by the Strickland Administration in about 10 weeks, and just when officials thought it couldn’t get any harder, it now has the uncertainties connected to massive federal budget cuts.
It’s not like the United States has demonstrated a significant commitment to urban areas in years, but with Republican control of the presidency and Congress, it is likely to get even worse. There is the normal talk about bundling up federal money into block grants to the states on the premise that governors know better what their states need than Washington.
However, in states like ours – really red – it gives right wing partisans a new carrot for their friends and a cudgel for their foes. Translated, it means that cities like Memphis will get even less attention because they are seen in Washington and in Nashville as hotbeds for Democratic voters while rural and suburban areas are the promised land.
As a result, there’s little reason for Memphis city officials to expect that city budgets will be increased as a result of federal largesse. In fact, changes in federal policies will be dramatic and budget changes means that Memphis, like other urban areas, will take a direct hit that will explode on city government’s budget spreadsheets as discretionary spending – already more than two percent less than its average for the past 50 years – is reduced and tax cuts favoring corporations and the wealthiest individuals reduce federal revenues.
The Congressional Budget Office reports that it expects the federal deficit to increase by $10 trillion in 10 years, which could increase the risks of a financial crisis to the current economy which the CBO describes as healthy. The “carnage” is likely to come from policy changes and budget increases in the future (despite alternative facts, poverty is falling, unemployment is decreasing, the deficit is getting smaller, wages are going up, industrial output is at the highest level in history, and the economy is expanding).
It is hard to see an emphasis in the proposed budget about building back the American middle class and creating jobs paying living wages.
Meanwhile, repeal of the Affordable Care Act, according to the CBO, would increase the number of uninsured Americans by 18 million in the first year and 32 million by 2026. That too will have impact on thousands of people in our region, particularly those receiving subsidies for their insurance costs, and could mean that Shelby County Government will have to increase its funding for Regional One Health.
In its zeal to roll back regulations, including some protecting the environment and health of workers, the federal government could actually be reducing funding for health care at the exact time it’s increasing risks to health.
A Heritage of Attacking Social Programs
Back to City of Memphis budgets, the budgetary framework circulating in Washington, D.C., would cut money for community development, public transit, energy efficiency, criminal justice reform, Supplemental Nutritional Assistance Program (SNAP, formerly food stamps), Pell grants, and more. Some of these would also hit Shelby County Governments, such as cuts to Head Start funding.
The broad budgetary strokes at this point are the product of the Heritage Foundation, the conservative organization that was so active during the Trump transition. When the Heritage Foundation was established in 1973, it was a center of conservative research and thought, but over time, it became more and more aligned with the Republican Party.
When the famously confrontational Jim DeMint, formerly U.S. Senator from South Carolina associated with the Tea Party, three years ago, the transformation was complete. Mr. DeMint toured the country toward the end of the presidential campaign and the Heritage Foundation bought online ads attacking Republican House members who didn’t sign on to his crusade to defund the Affordable Care Act.
With the Heritage Foundation becoming more known for its in-your-face activism, many of its long-time members complained that it was not founded to become an arm of the GOP and that its shift from a conservative think tank to a hidebound, far right organization more interested in dogma than research removed a thoughtful voice from public debate. It is the Heritage Foundation’s budgetary framework that is now acting as the starting point for the first Trump budget. The proposal is the work product of the Republican Study Committee but in truth, it is the Heritage Foundation, which now so entwined with the Committee that it’s not possible to tell where one starts and the other ends.
To give an idea of the budget’s impact on Memphis, consider this:
* Department of Housing and Urban Development (HUD) – Budget cut of $4.3 billion this year and elimination of Community Development Block Grants next year.
In particular, the block grants have been keys for projects all over Memphis – from housing in neighborhoods to high-impact major projects. (Shelby County Government also receives CDBG funding in a much lesser amount.) The money spent in Memphis on community development (affordable housing, economic development, public improvements, and public services) largely reflects the money it receives from the federal government, and already, the level of funding has been going down in recent years.
President Donald Trump, in his first executive order, increased by $500 the cost of mortgage insurance for FHA loans, and in addition, there is a plan to transfer subsidized housing to states while reducing some housing programs by 10% a year for the next 10 years.
Also considered for the chopping block are programs like the one that funded the $60 million grant to Shelby County Government for innovative disaster resilient projects in Memphis and Millington. It addressed longtime chronic flooding problems with innovative planning that gave birth to new parks, improved parks, and new outdoor spaces and wetlands that will be major additions to our community’s new outdoor persona. In addition to the Big Creek Wetland and Recreation Area, there will be the Wolf River Restoration and Greenway in Raleigh and Frayser; South Cypress Creek Watershed, and Neighborhood Development in Southwest Memphis that will pay for relocation of homeowners near Weaver Park. Finally, resilience research will identify the risks from floods, earthquakes and other catastrophes.
* Department of Energy – Budget cut of $10 billion.
It is clear that a high priority of the Trump Administration and Congress is to eliminate emission and pollution reduction programs. This includes eliminating programs like Energy Star and the sale of petroleum reserves. It also includes a cut of more than $400 million to TVA, elimination of greenhouse gas regulations that combat climate change, and the possible privatization of the National Weather Service.
* Department of Transportation – Budget cut of $21.9 billion.
Just as there is growing insistence that Memphis Area Transit Authority is adequately funded and its services improved, the federal government is almost certain to reduce the budget of the Federal Transportation Administration (FTA) by $4.01 billion and phase it out over time. The FTA provides funding and technical help to public transportation systems.
The budget would also reduce funds to many other transit programs to state and local governments. It will also eliminate the TIGER (Transportation Investment Generating Economic Recovery Grant Program) program’s $510 million budget. Memphis most notably received a $15 million TIGER grant, the Main to Main Multi-Modal Connector Project, that restored Main Street and supported the Harahan Bridge pedestrian and bike trail over the Mississippi River.
* Department of Justice – Budget cut of $3.8 billion.
The plan is to eliminate the Office of Community Oriented Policing Services, Violence Against Women grants, and Community Relations Services, which works to defuse community conflicts. It also includes reduced funding for the Civil Rights and Environment and Natural Resources departments.
* Department of Agriculture – Budget cut of $136.1 billion.
The budget would uncouple farm subsidies and funding for the SNAP program (food stamps), and the SNAP budget would come up for a vote separately. This would have more impact in Shelby County Government than City of Memphis government.
* Department of Education – Budget cut of $17 billion.
The budget would eliminate competitive grant programs and include vouchers in Title I funding to low-income districts like Shelby County Schools. As for higher education, there is discussion about reducing Pell Grants, eliminating some federal loan forgiveness, and reducing regulations on for-profit “colleges.”
* Department of Labor – Budget cut of $41.4 billion.
The Jobs Corps would be eliminated, which means that the Dr. Benjamin L. Hooks Job Corps Center would likely close. The Job Corps is a no-cost education and career technical training program for 16 to 24 year-olds, and it is crucial to Memphis’ goal of moving more young people into the economic mainstream.
The budget eliminates a number of other workforce training programs and eliminates the Davis-Bacon Act requiring that the federal government pay prevailing wages on construction projects. It also rolls back the new overtime regulations created by the Obama Administration to waive work requirements for some welfare recipients.
Hitting a Moving Target
In other words, programs that have been important to Memphians are under the ax. While the human costs of these changes are obvious, the impact on City of Memphis (and to a more limited extent, to Shelby County Government) will result in less money coming into Memphis from the federal government to help address structural problems and to support its renewed aspirations.
But it’s not just about reduced funding. These changes may also increase spending for city taxpayers as they take up the slack to pay for services that are necessities for Memphis.
That said, while the budgetary costs for Memphis may be profound, the social costs are to be even more alarming.
We never envy city officials in preparing budgets which year after year become more and more difficult, but this year, their work if further complicated by assessing the moving target of the federal budget and determining its final impact on city taxpayers.