54% of Cities Expect to Finish Year in Black, Survey Predicts

More than half of America’s cities will live within their means this year, according to a report released Monday, but finishing in the black often will come at the expense of crime prevention programs and other municipal services.

Budget managers in 54% of the 551 cities surveyed in the National League of Cities’ annual study of urban fiscal conditions forecast that revenues will stay ahead of spending. In last year’s survey, about 66% of cities projected that they would finish in the plus column. Survey results from the last two years suggest that some stability in municipal balance sheets is returning after several years of widespread stress.

Spending will continue to outpace revenue in many cities, however, because of the skyrocketing costs of health care for city employees, unfunded mandates and repairs to streets and other public facilities, local officials said.

Debt threatens more cities in the West than anywhere else, the survey shows. This year, 25.6% of the region’s cities will end the year in the red, up from 22% in 1991.

Los Angeles officials said they are fairly optimistic about the city’s fiscal health. The balance for the fiscal year that ended June 30--$68.9 million--surpasses last year’s bottom line of $40 million, because of money saved from layoffs. About $64.6 million of the balance is already committed to programs in the budget that took effect July 1, however, leaving the city with less than $4 million in a reserve coffer that is supposed to contain around $30 million, city officials said.

Defense cutbacks, earthquakes and fires have had a pronounced effect on city budgets in Los Angeles and throughout California. And city managers are left with a limited number of revenue-raising tools because of tax caps and other state measures approved by voters, said Newark, N.J., Mayor Sharpe James, the league’s president.

“Looking at the overall trends, the worst appears to be over,” James said at a news conference. “But just because you can balance your checkbook doesn’t mean you can feed the kids.”

To end the year in the black, many cities have delayed hiring new police officers, closed children’s recreational facilities and rolled back other services, he said.

Los Angeles officials saved $4.5 million by cutting back on street resurfacing from 135 to 100 miles per year but estimate that the long-term costs of road repair will be significantly higher.

Across the country, 43% of the cities reported cuts in spending, which often indicates deferred maintenance. Donald J. Borut, executive director of the league, called the cutbacks “one of the short-term balancing Band-Aids that can lead to higher costs in the long run.”