Magazine article Nation's Cities Weekly

Budget Impasse Jeopardizes Key Municipal Programs

Magazine article Nation's Cities Weekly

Budget Impasse Jeopardizes Key Municipal Programs

Article excerpt

Tax Cut Discord Clouds Funding Process

A decision on federal appropriations levels for city programs is expected to be played out against a backdrop of partisan debates over the appropriate size of tax cuts and their impact upon the projected budget surplus when Congress reconvenes this September.

With President Clinton's recent veto of the marriage penalty tax relief bill (H.R. 4810) and threats against appropriations bills and the estate tax repeal measure (H.R. 8), a budget gridlock is expected, according to administration officials.

In his weekly radio address on August 5, President Clinton cautioned Republican congressional leaders against efforts to create a record number of tax cuts predicated upon a budget surplus "that may or may not materialize."

Such changes in the federal tax structure could potentially threaten federally funded programs that are essential to cities and towns such as the Social Services Block Grant and the Local Law Enforcement Block Grant.

Recent 10-year projections by the Congressional Budget Office (CBO) placed the federal budget surplus at $4.19 trillion. Last April, a nonbinding, partisan budget resolution was passed by Congress calling for cuts in several domestic programs linked to an estimated $150 billion reduction in taxes over the next five years including $11.6 billion in 2001.

Along with the marriage penalty tax relief measure and repealing the estate tax, other proposed measures include repealing the federal telephone excise tax; creating education savings accounts; creating special renewal communities in urban and rural areas and increasing the annual contribution level permitted to individual retirement accounts (IRAs). …

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