Other Cities: Not on the Skids - Yet

With few exceptions, major cities across the U.S. are in financial trouble, though their problems are far less menacing than New York's. One reason is that most other cities are forbidden to issue short-term bonds and notes for operating expenses; those that may do so generally must pay off the debts within the same fiscal year. In inflationary times, these cities have had to raise taxes or reduce payrolls and services to live within their incomes. Following are reports on the 12 biggest U.S. cities, except for New York and Washington, D.C., the eleventh largest, which has been excluded because of its unique dependence on the Federal Government. The cities are ranked according to 1975 population as estimated by Standard Rate & Data Service:

2. CHICAGO had a $16 million surplus in 1974, and forecasts a surplus for 1975.

The local economy remains strong, largely because of businessmen's confidence in the management skills of fiscally conservative Mayor Richard Daley. As a result, Chicago has escaped many of the financial problems of other cities. In fact, because new taxes on payrolls and cigarettes raised $50 million in additional revenue, Chicago was able to cut its property taxes by 10% in the past four years. But the Second City's fiscal success is also due partly to the fact that many of its public expenses are paid by independent authorities or the county or state. For example, the city government spends nothing on schools, which are operated by an independent board that has a budget of $1.16 billion ($60 million larger than the city budget) and a deficit of $47.4 million. Cook County, which includes most of Chicago's suburbs, operates the metropolitan area's huge public hospital; still another governmental body runs parks in the county, including those within the city; and state and federal moneys pay nearly all the county's $1 billion welfare bill.

3. LOS ANGELES had a $61.3 million surplus in fiscal 1975, and anticipates a $13 million surplus this year.

Though the tax base has been growing at 5% a year, the city still has had to postpone about $30 million in capital expenditures--including street improvements--to avoid layoffs or cuts in public services this year. City Administrative Officer C. Erwin Piper predicts that to balance its budget next year Los Angeles will either have to trim some services or raise property taxes again; they went up nearly 10% in August.

4. PHILADELPHIA reported a $19 million deficit in fiscal 1975, and projects a possible $50 million deficit in 1976.

Mayor Frank L. Rizzo is squeezed between a state law requiring a balanced budget and his own determination not to raise taxes or pare services. On paper, this year's budget is within 5% of balancing, but only because of some highly questionable revenue calculations. For example, the budget writers included $65 million in aid that has not yet been appropriated by Congress or the state legislature. City Controller William G. Klenk, a Rizzo opponent, claims that Philadelphia has been using "illusory accounting techniques." He estimates that last year's deficit was actually $82 million; other critics predict that the fiscal 1976 deficit will be close to $100 million.

5. DETROIT ended fiscal 1975 with a projected deficit of $17.6 million, but forecasts a balanced budget this year.

When the slump in the automobile industry pushed the city's unemployment to 23% and reduced its revenues by an estimated $16 million last winter, Mayor Coleman Young laid off some 1,500 city workers, or 6% of the total. He is now trying to eliminate another 1,200 jobs by not filling vacancies and has reduced hours at the city's museums. Yet Detroit will escape a deficit this year only in the unlikely event that the state legislature agrees to raise the city nonresident income tax from one-half of 1% to 1%.

6. HOUSTON, after a $12.7 million surplus in 1974, anticipates a surplus of that much or more in 1975.

The city's economy, largely based on oil, is booming. Unemployment is a relatively low 4.9%, population grows at 3% a year, and the property tax base expands at 13.3% annually. A young city, Houston has few of the urban ills found elsewhere, such as dilapidated housing and large welfare rolls. As a result, officials foresee no future budgetary problems. They lowered the property tax rate by 3% this year.

7. DALLAS had a $6.5 million surplus in the last year and expects a $4.5 million surplus this year.

To keep in the black, the city council recently raised property taxes by 3.3%. In addition, Dallas will trim 255 city workers from its payroll this year, and City Manager George Schraeder plans to cut an additional $2 million in nonessential services. They include reduced city support for museums, book mobiles and the police department's public relations activities.

8. BALTIMORE had a surplus of $52.2 million in fiscal 1975, and expects a surplus of more than $30 million this year.

City property taxes have been held near last year's rate, principally because the state in recent years has taken over responsibility for operating the municipal airport and financing school construction. The state also pays about one-third of the police department and public library budgets. Even so, Baltimore has put a freeze on hiring and on buying new equipment and eliminated 800 jobs through attrition. Services will have to be cut further next year unless the city comes up with about $50 million in new revenue.

9. INDIANAPOLIS ended last year with a $7.3 million surplus, and projects a $3.8 million surplus for this year.

Once shaky, the city's financial condition was greatly improved after it was merged with its suburbs in 1969. Since then, the tax base has been rising an average of 6% a year, largely because of growth in the metropolitan area's diversified economy. As a result, the city has not been forced to reduce services or its work force. Nor are cuts expected in the future. One reason: a reassessment is expected to increase the value of taxable property by 40%.

10. SAN DIEGO ended fiscal 1975 with a $5 million surplus, and forecasts an unspecified surplus this year.

Revenues are growing but not as fast as costs. Officials have eliminated some services, such as trimming residents' trees, and postponed purchases of fire-fighting and recreational equipment. They also have cut 213 jobs through attrition this year, plan to abolish as many in 1976, and have held pay increases to 5%. Disgruntled policemen responded by hiring the Teamsters for $200,000 to represent them in contract negotiations starting next spring. Rather than increase property taxes next year, city officials are considering imposing an income tax.

12. MILWAUKEE ended 1974 with a $43 million surplus, and forecasts a $38.5 million surplus this year.

Even so, city officials anticipate a crunch in 1977, chiefly because of recently granted 8% wage increases for city employees. The city has imposed a temporary freeze on promotions and hiring. If the fiscal situation worsens, city Budget Director Ed Whitney has recommended that the city council consider a number of other ways to cut costs, including laying off 900 workers, imposing across-the-board pay cuts, requiring employees to take up to 26 unpaid holidays a year and closing the city's public hospital, museum or some libraries. Such future shock could apply to almost all of the nation's large cities.

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