Cities economic drivers of most U.S. states-study

WASHINGTON Thu Feb 24, 2011 6:45pm EST

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WASHINGTON Feb 24 (Reuters) - Metropolitan areas are the driving engines of economic activity in almost every U.S. state, according to a study released by the Brookings Institution on Thursday as mayors from across the country resisted proposed cuts to federal aid to cities.

In 47 out of the 50 states, metropolitan areas generate the majority of state economic output, according to the think tank, which frequently researches economic policy.

Only in Montana, Vermont, and Wyoming does a majority of economic activity occur outside metropolitan areas, Brookings said. That means that in many states typically deemed rural, such as Idaho, cities are responsible for most of the gross domestic product.

The finding comes after President Barack Obama and the U.S. Congress have suggested cutting grants for cities as part of an effort to pare the federal deficit, which is projected to exceed $1.6 trillion this year.

The U.S. Conference of Mayors met with members of the Senate on Thursday to oppose reductions in Community Development Block Grants and other programs.

Last week, the House of Representatives passed a funding bill that would slash 62.5 percent, or $1.5 billion, from the grants, which cities and counties use to combat blight, help create housing and repair infrastructure.

"These drastic cuts are unacceptable to the mayors of America. Today, as non-partisan mayors we have raised our voices," said Elizabeth Kautz, president of the Conference and mayor of Burnsville, Minnesota, at a press conference.

Brookings found that the 366 metropolitan areas in the country contain 84 percent of the U.S. population and produce 85 percent of U.S. exports.

They are also home to 93 percent of people employed in science and engineering occupations.

"The economic future for states hinges largely on the performance of their metropolitan economies, which bring together the innovative firms, educated workers, and critical infrastructure that will propel the next wave of U.S. economic growth," the study found.

Brookings also found that in 15 states a single metropolitan area "alone accounts for the bulk of economic output," such as Boston in Massachusetts. In 16 states, just two metropolitan areas generate the majority of the gross domestic product, such as Los Angeles and San Francisco in California.

The economic recession that officially ended in 2009 created an historic collapse in many states' revenues. Because all states except Vermont must end their fiscal years with balanced budgets, many are still seeking areas to slash spending through 2012.

In recent months, states have pulled back on the aid they give to local governments, who are also hobbled by revenue declines from the housing bust and recession and are under pressure to spend more on help for the unemployed.

In the budget he unveiled last week, Obama suggested cutting $300 million from the community grants program, which Kautz said would limit economic expansion and job growth.

(Reporting by Lisa Lambert; Editing by Diane Craft)

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