The Big Apple's Fiscal Squeeze

NEW YORK CITY remains the dominant financial and cultural capital of the United States - one of the few frost-belt urban centers to actually add population during the 1980s. Yet New York, as Mayor David Dinkins is telling anyone who will listen, must get its fiscal house in order if it is to be the thriving community in the future that it has been in the past. In a grim speech last week Mr. Dinkins spelled out the bad news: barring cooperation from the city's powerful labor unions, the financial community, New York State, and the federal government, City Hall will have to slash essential services, lay off thousands of workers, and even close the Central Park Zoo to help balance the city's $29 billion budget for fiscal year 1992.

The total deficit? Over $3.5 billion. Finding the money won't be easy. The state, with budgetary problems of its own, is struggling to approve a financial package for the city. And municipal unions are balking at workplace reforms and financial givebacks. Yet labor costs make up 80 percent of the city's expenses.

Many of New York's problems are of its own making. Waste and graft have been built into the structure of the town over the years, as repeated scandals attest. Still, New York's difficulties also stem from the recession and, ironically, from the city's generosity. Outsiders often think of New Yorkers as gruff and contentious. But New York is a tolerant, liberal community which has bent over backward to welcome the disadvantaged, disenfranchised, and ailing. It is a town of immigrants; thousands arrive we ekly, clutching little more than a dream.

Unfortunately, recent newcomers arrived just as the economic boom of the mid-to-late '80s turned into the financial nightmare of the early '90s. Wall Street has laid off thousands of workers. The once huge manufacturing base has eroded. The upshot: New York City has seen its overall tax base dwindle.

There is evidence, however, that Mr. Dinkins's call for greater public unity will find a response. The ``Partnership of Faith,'' a new coalition of some 70 ministers and clerics, plans to address such challenges as AIDS, homelessness, and racism. An anonymous donor has pledged $2 million to help keep public swimming pools open for the city's children this summer.

But far more action is needed. Labor unions must curb featherbedding practices and hold down wage demands. Some taxes will have to be hiked. New York's massive bureaucracy needs to be cut back. Taxpayer dollars must be better spent. Medicaid and welfare costs could be taken over by the state.

Washington also needs to pay more attention to New York and other US cities. During the 1980s federal outlays to local governments were sharply reduced. That is shortsighted, given the overwhelmingly urban makeup of the United States.

Cities are not just incidental to the well-being of the republic; they are the trellises around which American society thrives.