More U.S. Cities Seen Spending Beyond Income : Government: Survey suggests that slow economic recovery is not helping municipal balance sheets. West is hardest hit, especially California.

Rising numbers of American cities will spend more money than they take in this year, suggesting that the slow-paced national economic recovery has done little to help municipal balance sheets, according to a survey by the National League of Cities.

Budget officers in 53% of the 688 cities that participated in the annual study predicted that general fund spending--for basic budget items such as payroll--will exceed revenues in 1993. In 1984, just 24% of those surveyed reported deficit spending.

The factors that most significantly contributed to budget difficulties were city employee health benefits (51%), infrastructure needs (33%) and local economic problems (25%).

The difficulties are more pronounced in the West, where 62% of those responding to the most recent survey said that they anticipated deficits. One-quarter of the cities in that region said that they expect their 1993 general fund expenditures to exceed revenues by more than 5%. And almost a third reported cuts in services.

The problems in the West stem from the slower economic recovery there, especially in California, said Minneapolis Mayor Donald Fraser, who is president of the league.

But he added that much of California’s financial predicament is “self-inflicted.” Proposition 13 and other tax-reducing measures passed by state voters have hampered revenue-raising efforts in the state, he said.

Almost 30% of cities surveyed nationwide said that their financial difficulties were made worse by federal and state mandates, including environmental cleanup and lead abatement orders.

With federal aid to cities slashed in half since 1980, 71% of the respondents reported that they raised or imposed new taxes and fees last year, and many others said that they froze or reduced municipal hiring and cut city services.

Newark, N.J., Mayor Sharpe James, vice president of the league, said that financial challenges have forced cities to adopt more creative strategies. As examples, he listed recycling, turning city services over to private contractors and agreements to join with neighboring municipalities to share the costs of police and fire protection and other services.

League officials cited the survey as evidence that the economic recovery remains sluggish and called for immediate approval of President Clinton’s budget, even though investments and tax cuts that would have benefited cities have been cut in half since the plan was introduced.

“It’s not ideally what we want, but we accept what’s on the table right now,” said league Director Donald J. Borut, who stressed the need to complete budget negotiations so that health care reform, affordable housing and other pressing city matters can be addressed.

Though they realize that Clinton will not be able to deliver all he promised during his campaign, city leaders “are feeling generally positive about this Administration,” Fraser said.

Cities finally have found a President who seems interested in helping to reverse the decline of the nation’s inner cities, which have become “the place where the poor have to live,” Fraser said.

“We have more children growing up in trouble, harder to educate and filling our jails,” Fraser said.

Cities’ Spending

Expected revenues and expenditures for select cities in the fiscal year ending in 1993:

(figures in millions)

Revenue Spending New York $30,700 $30,700 Washington 4,300 4,300 Los Angeles 2,376 2,364 Philadelphia 2,348 2,276 Detroit 1,178 1,232 Chicago 1,733 1,752 Boston 1,100 1,100 Dallas 512 512 San Diego 481 481 Phoenix 479 483 Seattle 387 389.5 Atlanta 353 363 San Antonio 335 337 Minneapolis 254 252

Imbalances do not necessarily indicate a budget deficit, as some cities obtain additional money from other sources.

Source: Figures supplied by city fiscal officers to a National League of Cities survey