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Cut Short

Cities feel the pinch as relief funds go to states instead.

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This story appears in the November 2003 issue of Entrepreneur. Subscribe »

This year's tax bill included many financial goodies forentrepreneurs, but fiscal relief to ailing cities where businessesoperate wasn't one of them. An earlier version of the Jobs andGrowth Tax Relief Reconciliation Act of 2003, passed last spring,included $4 billion in direct aid to cities. The provision waseliminated during negotiations, and $20 billion in aid went tostates instead-with no requirement to share any of it with cities.The move has outraged city and county leaders struggling with theweak economy and homeland security costs. John DeStefano, mayor ofNew Haven, Connecticut, calls cities "engines of the nationaleconomy" in need of economic stimulus. Any decrease in servicehurts business development, whether it's lack of consumerbuying or weakening infrastructure that can't transport goodsefficiently. Local efforts to close budget gaps with higher feesand other revenue generators also eat away at business profits.

Counties around Greensboro and Winston-Salem, North Carolina,have seen a modest jump in property taxes and fees, says DonKirkman, president and CEO of Piedmont Triad Partnership, aneconomic development agency in Greensboro, "but not of amagnitude that will impact the attractiveness of this area."Kirkman says the region's low tax burden and financial reserveshave mitigated the impact of the current downturn.

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