Nutter visits D.C., seeking emergency federal aid for city

Mayor Nutter sought emergency federal help for Philadelphia and other financially struggling cities in Washington yesterday, pleading his case in meetings with congressional leaders, the U.S. Treasury Department and members of President-elect Barack Obama's transition team.

In a letter to Treasury Secretary Henry Paulson, which Nutter hand-delivered to the Treasury building, the mayor asked for assistance on three fronts: public pensions, infrastructure, and access to capital for short-term cash flow.

"We did not say, 'Please just send us money,' " Nutter said in a telephone interview as he returned on a train from Washington. "These are created, targetive and creative ideas. We're asking for loans. We're asking for a hand, not a handout."

The letter was addressed to Paulson and not Obama because Philadelphia's needs are immediate, Nutter said.

"We believe the secretary has the authority to take action right now, using funds from the bailout package that has already passed," Nutter said. "The need is urgent and we did not want to wait until a new bailout package is put together and Sen. Obama becomes president."

Nutter said the officials he met with in Washington were "very interested in what we were talking about."

The letter, which was also signed by Atlanta Mayor Shirley Franklin and Phoenix Mayor Phil Gordon, lamented the fact that cities, thus far, have not played a central role in the federal government's response to the economic crisis.

"As you and others struggle with the appropriate approach to dealing with this unprecedented credit crisis, very little has been said about the consequences of this crisis on U.S. cities. This deeply concerns us," the letter states.

"Cities will disproportionately bear the brunt of the dislocations caused by the credit crisis and a contracting economy, unless the federal government steps in to assist us."

The mayors proposed that Paulson set aside $50 billion of the already-approved $750 billion federal bailout package for an Urban Infrastructure Re-Investment and Development Fund, which would provide grants and low-interest loans to cities to rebuild streets, bridges and other infrastructure.

They also asked for federal help with public pension funds, which have taken a terrible beating in recent months with the downturn of the world's financial markets. Philadelphia's fund, which stood at about $4.5 billion as recently as June, is now hovering around $4 billion.

Those losses were a major contributor to the city's $1 billion, five-year budget deficit, which has forced Nutter to make a series of extensive service cuts.

The mayors' letter called on Paulson to lend what would be vast sums to cities at low interest rates to shore up depleted pension funds. Philadelphia alone would need a $4 billion loan to fully fund its long-term pension obligations. If the Treasury complied, cities such as Philadelphia would be free to spend much of the money now allocated to pension payments on other services.

Finally, the mayors requested that the Treasury let cities borrow directly from the federal government to cover short-term cash flow. Big cities commonly take out loans to cover operating expenses, and pay the loans back when tax revenues come in. The tight credit market, though, has made even such routine transactions difficult and more expensive.