City Officials Fear Trouble Over Deficit

Most of the nation’s cities experienced good economic health in 1984, but nearly three-fourths of the urban leaders responding to a recent survey foresee hard times unless the federal budget deficit is reduced.

Just over half the 150 city officials who responded to the National League of Cities survey released today said they expect a recession unless the deficit is cut and nearly 75% said unemployment and interest rates will rise.

Only 8% said the economy can prosper without deficit reduction.

“Austerity and budget restraint have been the order of business during four hard years for cities, but local economic recovery finally seems to be broadly under way,” said Alan Beals, executive director of the league.

“Now, after two years of recovery and low inflation, increased public demands are apparent for services and for restoration of recession-forced budget cuts,” Beals said.

Despite their concern with reducing the federal deficit, Beals said city leaders will be reluctant to accept without a fight any significant cuts in aid to urban areas because cuts of the last few years have resulted in a “pent-up demand for services that are going to be a key problem for them in balancing their budgets.”

At a news conference, Beals noted that cities--unlike federal officials--do not have the luxury of operating with deficits and must either cut services or raise taxes to balance their budgets.

He said that the cities will be willing to make “some sacrifices” in the coming budget fights because they are so concerned about reducing the deficit but that the primary cuts should be in areas of the budget that have been growing.