Cities in balance

By

NO mayor likes to admit it. But the financial news filtering out of America's cities in recent years -- despite the recession of the early '80s and all those federal cutbacks -- has been surprisingly good. Their improved ability to manage limited resources well should serve as a valuable lesson to Washington as it tries to bring its own financial household under control. A new survey of the 50 largest United States cities by Crain's City and State magazine finds that most of them are finding the money to meet this year's needs. Together, the 50 expect a general-fund balance of $1.41 billion by the end of 1986. The total amounts to more than 3 percent of their joint operating expenses and is a higher percentage than either states or counties expect.

A recent Urban Institute report on cities during the Reagan years indicates that by every measure, American cities were in stronger shape financially at the end of 1982, as the recession was ending, than at any time during the 1970s.

The trend is the more impressive because, for most cities, getting there hasn't been easy. Most mayors and other city officials have taken considerable political heat for tax increases, new charges for once-free city offerings, and cuts in services and personnel made necessary by the financial pinch.

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It has been a difficult chore even in some of the more prosperous-looking medium-size cities. Portland, Maine, for instance, which has a major waterfront development under way and a sparkling new art museum, has nonetheless had to raise the local property tax 4 percent to 6 percent every year since 1979.

The Crain survey of large cities notes that 22 had to dip into prior-year reserves even to balance the books this year.

Unlike the federal government, cities by law must balance their budgets. Many city leaders have taken a cue from the plight of New York during its mid-'70s financial crisis, and near-bankruptcies in that decade in Cleveland and Detroit. Most cities in the '80s have become more conservative bookkeepers, beefing up their financial staffs and trying harder to anticipate and adjust to any shortfalls.

Helping, too, is the fact that Congress to date has moderated some of the worst of the expected administration cuts and that these have fallen largely in marginal rather than essential services. An improving national economy has also made a key difference.

Yet for many cities, the toughest economic challenge may be yet to come:

Congress is on the verge of discontinuing urban revenue-sharing funds, the only source of federal dollars for thousands of smaller cities and often used for such staples as police and firefighters.

Most cities expect a decline in growth of revenue. A National League of Cities survey of 660 cities earlier this year found that 56 percent, up from 36 percent last year, expect this year's expenses to exceed revenue.

Cities dependent on oil and high-tech are particularly feeling the pinch of reduced demand in both areas. Austin, Texas, for instance, will cut spending by $1.7 million in fiscal 1987. New Orleans, which faces a $10 million deficit, will finish the year with several difficult belt-tightening steps, including a four day government workweek, salary cuts for top officials, and a new payroll tax.

Still, many cities have adopted a much more economically responsible system of operation. That emphasis should be nurtured -- and expanded. And what they have been able to do so far should serve as a valuable reminder to Washington bureaucrats that, with proper planning and determination, deficits can be eliminated.

Given the cultural and economic importance of the nation's cities, it seems only reasonable that future federal cuts not fall too hard and too singularly on them. It is important to all of us that US cities remain viable and on course.

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