SALT LAKE CITY — The mayor says the budget stalemate in Washington could jeopardize funding for a key transit project, the two-mile streetcar extension that relies on $26 million in federal funding.

"We have an agreement with the federal government. There's talk about pulling that whole agreement that we've already made," said Mayor Ralph Becker. "If that happens that project for the foreseeable future is just going to get cut off."

President Barack Obama and GOP congressional leaders remained deadlocked Tuesday over whether a budget deal that would raise the federal debt limit will also cut spending and raise taxes.

Last week, mayors from around the country met in Los Angeles. A group of 50, including Becker, issued a resolution calling for Congress and the administration to "step back from bickering and pass a debt ceiling plan."

Default "must be avoided at all costs," the resolution stated.

"It'll affect everything from every development going on in our city to people getting their Social Security checks and assistance with their rent checks," Becker said.

Cities are sure to feel the bite if a deal can't be reached.

Greg Fischer, mayor of Louisville, Ky., who was in town visiting Utah relatives, says federal funds account for 15-25 percent of the average city's budget.

He said the deadlock is distracting the U.S. from other challenges.

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"Where we're struggling as a country right now is jobs," said Fischer, a Democrat. "So the impact of this not happening (is) the affect on jobs, on people not paying their rent anymore, landlords going out of business, the ripple effect on jobs and employment. We can't afford that as a country right now."

Becker said other new developments and municipal projects, such as the new downtown Salt Lake public safety building, could see costs skyrocket if there's a federal default and interest rates rise.

"You bump up those interest rates and all of the sudden there are road projects, there are sidewalk projects there are lighting projects all kinds of things become less affordable," Becker said. "We will have to stop doing some of those."