Federal belt tightening teaches mayors tough lessons in self-reliance

The Reagan administration's budget cuts and the current recession are forcing the nation's mayors to take a crash course in self-reliance and survival.

''We're really between a rock and a hard place - we're doing everything we can short of cake and garage sales,'' says Janet Gray Hayes, mayor of San Jose, Calif.

''The easy cuts have already been made - now we're into the hard ones,'' concurs Gerald Blessey, mayor of Biloxi, Miss. ''And you can only carve a small pie so many times.''

Until recently, it was largely mayors of the financially pinched, older cities of the Northeast and Midwest who complained most loudly about the effects of federal aid cuts. But interviews with several delegates to the 50th annual meeting of the US Conference of Mayors here suggest that mayors of the Sunbelt cities in the South and West are beginning to feel just as keenly the effects of Washington's actions and the economic downturn.

Certainly adding fuel to their concern was the release over the weekend of a Reagan administration urban policy report which called for even further cuts in federal aid to cities. It said that much of that aid had contributed to urban deterioration and dependence on Washington. Reagan aide Rich Williamson told mayors here that it was a midmanagement staff report which the President in no way endorsed.

His reassurance did not appear to satisfy the city leaders. Indeed, it helped to forge more of a nonpartisan alliance than at past conference meetings. The resolutions committee unanimously passed a statement underscoring its flat rejection of the philosophy, approach, and content of the Reagan administration report.

''Our revenues are down, just as they are for businesses,'' says Mayor Hayes. San Jose's budget this year is balanced, but in the new fiscal year beginning in July a potential $19.6 million to $25 million deficit looms. Many cuts, she says , have already been made and more, particularly in social programs and library services, must come. User fees, charged mainly to developers for such city services as plumbing, inspection permits, and electricity, have been raised as high as is legally possible. These hikes are being challenged by those paying the increased fees.

Technically, like all California cities, San Jose could raise its property tax. But, under the stipulations of Proposition 13, this could happen only with the approval of two-thirds of the voters.

''That has about as much chance of getting through as the sun does of setting in the east,'' says Mayor Hayes.

''It's taken the recession longer to reach us, but it's here now,'' says Ron Gonzales, mayor of Sunnyvale, Calif., who says his city's infrastructure, from sewage treatment to roads, has been hardest hit by the city's dollar shortage. Sunnyvale, which is in the heart of high-tech Silicon Valley, could lose up to $ 1.9 million of its $65 million budget in state cutbacks.

Mayor Paul Netzer of Culver City, Calif., says that by design his city's budget for years leaned only very lightly on the state and federal government for revenue help. Mayor Netzer says he is concerned that, besides having to make up for lost state funds, Culver City could lose $5 million in federal revenue sharing funds now used in large part for police and fire protection.

''I really liked what Reagan was doing when he campaigned to cut out the fat in government, but to go in and whack every social program as he's done doesn't make sense,'' says Mayor Bill Toney of Huntington, W.Va., where unemployment is at 9 percent. This summer his city has lost all its Comprehensive Employment and Training Act funds and has taken sharp cuts in government-assisted social programs. In addition to a hiring freeze and a 5 percent personnel cut, fees for residential garbage collection will double in the new fiscal year beginning in July.

Biloxi, which has an Air Force base that supplies 25 percent of the children educated in city schools, had long leaned on Washington for ''impact'' aid in lieu of property taxes not paid by military base residents. The funds have already been cut by one-third - ''a severe strain,'' says Mayor Blessey - and are slated to be wiped out altogether. The mayor says the city's work force has already been trimmed by close to 10 percent and such services as sewage treatment plant management and garbage collection have been contracted out to private business at substantial savings. The city is now considering putting its car fleet on propane or natural gas.

''The problem is that many of the things you do can only be done once,'' says Mayor Blessey. ''We all agree the federal budget needs to be trimmed, but it should be done with a scalpel rather than an axe. The transition is tough. If it could somehow just be made more humane. . . .''

What is the potential of a helping hand from private business as Washington pulls back? Many mayors agree that more public-private partnerships must be formed. But not many seem to believe that help from business will be enough to bridge the gap.

But some, like Mayor Blessey, argue that private help has ample potential - though not necessarily in dollars - if creatively applied.