November 24, 2008
Phoenix WPA -- Let's Jump-Start the Economy
Mayor Phil Gordon
Phoenix has a long and well-deserved reputation for managing its budget. Our bond rating continues to be the highest in the nation. We plan farther ahead than any other city I know of. While most cities look 2 or 3 years down the road, we look 10 or more. And even in difficult economic times, we weather the storm better than most because of the way we conduct the people's business.
It's no secret that the national and global economies are struggling. And even as an "administration-in-waiting" devotes its attention to addressing the economic crisis in the new year Phoenix, once again, strives to stay in front of the curve.
That's why I have announced the Phoenix WPA -- "Work Projects Advancement" which, like the WPA of another era, will employ thousands of people, generate millions of new tax dollars and jump start a local and state economy that could really use it. Phoenix WPA is a 3-point plan that has already been implemented.
If you want to jump-start the economy, the cities can get it done in a quicker, more efficient way.
Point one includes budget cutbacks in city government (which includes the elimination of employee positions, a hiring freeze and unpaid furloughs. While the State of Arizona has been forced to reduce its budget for two consecutive years, Phoenix has had to make reductions totaling $206,000,000, including the elimination of 700 positions, in five of the past six budgets, with a sixth year remaining flat. In this upcoming year alone, we are more than doubling the cumulative cuts of the past six years by reducing our budget by an additional $250,000,000 and eliminating an additional 1,000 positions.
Further, in my own office, we've already made staff reductions and my remaining staff will be voluntarily taking one day off each month without pay. No vacation time, no sick time -- 12 actual days during the year without pay. I'm doing it, my entire staff is doing it and we're asking every department to make that request to their employees. Some will be able to participate at various levels, others won't. But everything helps, and reduces the likelihood of layoffs. We're also asking the City Manager to consolidate jobs, programs and even Departments where appropriate.
Further we will be convening a meeting with our various labor unions to ask them to voluntarily forego their scheduled raises for one year to avoid layoffs and protect jobs.
Point two is to create new revenue. We have already created a Revenue Task Force to come up with creative ideas to find new sources of revenue. They are hard at work, and will be making recommendations to the City Manager and Council on December 9th.
Today, I am proposing that the City extend appropriate current contracts that provide revenue streams to the City and ask the private companies that have those contracts to develop new ways of increasing revenue to Phoenix. For example, we sell advertising space on buses, at bus shelters, at the airport and in other areas of our City. I'm proposing that we extend those contracts, to ensure continued revenue and that the companies look for new advertising opportunities at our city-owned facilities.
Step three is to continue and accelerate public works projects. The Council has advanced $39 million is construction projects that have already been approved and funded. Examples of this include Street repairs citywide. This will immediately add to our sales tax base, and put people to work right away. We also have reaffirmed 3.3 billion dollars of additional capital projects between now and 2010. None of this involves additional city hiring, but will result in thousands of private sector jobs.
With the continuation of the existing Passenger Facility Charge at Sky Harbor, 25,000 jobs will be created for projects such as expanding the automated train, tarmac rehabilitation at Terminal 4, airfield lighting and runway signage. That demonstrates, once again, that Phoenix Sky Harbor International Airport is the most important economic engine in the Valley.
The second part of Point Three is the heart of this three point plan. As I said earlier, like the public works programs of the Depression era, Phoenix Works is designed to provide critical infrastructure and employ thousands of people right here in Phoenix. Together with the Mayors of Philadelphia and Atlanta, I signed a letter to Treasury Secretary Paulson suggesting that the best use of federal funds would be to provide bridge loans to cities like ours to begin work on infrastructure projects that have already been approved and are being held up only be the tightening of the loan and credit markets.
Just this morning, we were on a Conference Call with our nation's 50 largest cities to talk about a list of projects we can provide to Treasury.
In the meantime, I am making a similar request to the leadership of Arizona State government. And here's the case that we are making:
We have hundreds of millions of dollars in capital projects that are ready to go, awaiting a funding stream. Now capital budgets are different from operating budgets. Operating budgets are funded through the general fund -- and that's what we have been cutting from our annual budget. That's people and programs.
But capital projects are bricks and mortar. They are buildings and sewers and roads and other infrastructure. They are an investment in ourselves -- an investment in our future.
I am asking the State of Arizona to consider providing Phoenix with bridge financing to advance our capital projects. At our airports alone, we have 50 million dollars worth of projects that could be started before the end of this calendar year and an additional 200 million dollars that can be started before the end of the current FISCAL year. So what does that mean? Why should the State or anyone else think that's a good idea?
Because for every 100 million dollars in construction projects, 1,500 people are employed. People from architects, to designers, to attorneys, to workers from every trade imaginable. That means, for just our airport projects, we could employ 3,750 people in the next few months.
Those people will be able to pay their mortgages. Buy new cars. Keep food on their tables and keep their families provided for. And when they make those purchases, they will be paying sales tax to the State and City.
But even more than that providing this "bridge funding" to Phoenix is a great investment for the State. Why? Because these are capital projects that will employ private companies that will purchase building materials and, yes, pay sales tax. So for a $350 million loan at our airport, about 13 million dollars will go right into the state's coffers from sales tax, and 5,250 jobs will be created. That makes good business sense for the state in terms of return on investment, putting people back to work, and ensuring future sales tax revenues. Not a "win-win", but a "win-win-win".
So this nation and this city are at an economic crossroads. We can cut and run, slash and burn or we can work our way through the challenges. In Phoenix, we always work our way through even the most difficult of challenges. And we'll work our way through this one too -- with the Phoenix WPA.