City officials across US decry Reagan-proposed federal-aid cuts

Many US mayors are hopping mad about President Reagan's proposed budget. They feel that cities, in the name of budget reduction, have been targeted for a disproportionate share of spending cuts. ``Grants to states and localities would drop by $20 billion in the next fiscal year. This represents an 18 percent cut,'' says New Orleans Mayor Ernest Morial, president of the United States Conference of Mayors.

Almost every federal urban program of significance would be dropped or sharply cut under the fiscal 1986 budget, according to an analysis by the mayors' group (see chart).

Regional reports, below, reflect the impact on specific city needs and programs, along with reaction to the budget proposals by local officials.

If transit aid cuts in President Reagan's budget are enacted, San Diego will be able to add only four miles, instead of the planned 16, to its new trolley system. And the seven Amtrak passenger trains a day serving the San Diego-Orange County-Los Angeles corridor may stop running altogether, although state and local officials have vowed to try to save them. Los Angeles transit spokesmen say fares might double to $1.30 -- $1.75.

The budget cuts could finish, in some instances, what California's Proposition 13 tax cuts started in 1978. The public library system, for example, already operating on half-day schedules, could close down most branches.

In Texas, officials of Houston, where traffic is one of the most serious local problems, say the proposed budget would dash plans for a transitway system -- special lanes and bypasses for buses -- except for the first segments, already under construction.

Phoenix could keep its transit system solvent with state lottery money for about a year, local officials say. Then its revenues would fall by a third.

Throughout the Southwest -- hard-core Reagan country -- it's hard to find anyone in city government who likes the Reagan budget. The proposed end of revenue sharing is the greatest concern, followed by the end of transit operating subsidies.

``I'm not too sure some of the cities are aware of how much these cuts are aimed at them,'' says John Hanson, a lobbyist in Washington for the state of Texas, ``and how serious some people here are about carrying them through.'' Texas cities are not expecting much bailout help from state coffers: The state is expecting a budget shortfall of about $1.2 billion over the next two years.

California and Arizona are both looking at healthy state surpluses, but cities have little hope of prying much of that money loose.

``I'd hate to sacrifice my town for two rivets in a B-1 bomber,'' says Chip Dennerlein, director of intergovernmental affairs for the city of Anchorage. Most city officials contacted in the most conservative, pro-Reagan country of the West have just about the same attitude toward the President's budget proposals. The feeling in the Pacific Northwest and interior Western states is that cities have been tightening their belts ever since Reagan came to office, that they've been doing their share in cutting back. Though mayors in nine major Western cities foresee ``grave'' consequences if Reagan has his way, they are unanimous in their feeling that Congress won't accept the cuts.

As elsewhere, it's the looming demise of federal revenue sharing that is most lamented. Many cities, including San Francisco; Portland, Ore.; and Boise, Idaho, use revenue-sharing funds to pay for police and fire services.

Places like Las Vegas, Nev., and Casper, Wyo., where the local natural resource economy has been in a slump, never have seen federal revenue sharing as a reliable source of money and have never used those funds to pay for essential services.

City officials in Oregon and Washington are particularly concerned about a proposal that would indirectly, but dramatically, affect their budgets. The President's budget proposed that hydroelectric power facilities begin paying back federal loans at today's interest rates. ``This would have a huge effect on the whole Northwest,'' says Maureen Sullivan, an aid to Seattle Mayor Charles Royer. ``It could raise power rates 10 to 20 percent.''

Proposed elimination of federal aid to local transit systems has officials in Portland and Seattle worried. They are not sure transit projects in their cities could continue without promised funds from Washington.

Officials in the few Western cities that have budget surpluses -- Las Vegas, Seattle, Salt Lake City, San Francisco -- report that those funds would be depleted immediately if Reagan cuts materialized.

Honolulu officials estimate some $30 million in federal funds, including $15 million in revenue sharing and $3.5 million in urban transit aid, could be in jeopardy. This could force a $5 boost in the city's property tax rate.

In Denver, the Reagan budget would cost the city $12.4 million in revenue sharing and $2.4 million in Community Development Block Grants, explains mayoral assistant Thomas Gougeon. These and other cutbacks would have a major adverse impact on the city, he says.

Milwaukee Mayor Henry Maier views the proposed Reagan budget cuts as one more sign that the nation is ``heading for a new urban crisis.'' The Midwest, long dependent on a healthy agricultural and manufacturing economy and containing many of the country's oldest cities and some of its highest unemployment rates, would be particularly hard hit by the cuts. The economic recovery has come late and slowly to this region; states are viewed as not strong enough economically to compensate cities for the federal gap, even if so inclined. More than two dozen of the region's mayors are expected to gather in Chicago today for the first of a series of US Conference of Mayors briefings on the Reagan cuts. Budget analyses usually are mailed to mayors, but conference spokesman Mike Brown says that since this budget is revolutionary ``we wanted to do a bit more.''

Midwestern mayors and budget officers say the termination of federal revenue sharing would be devastating.

Not many cities have had the foresight of Fort Wayne, Ind., where such funds are still used only for capital, recreational, or cultural expenses. ``We try to use it for a lot of one-time expenditures so we don't get too used to it,'' says Fort Wayne deputy comptroller Jim Haley.

Most cities, from St. Louis and Chicago to Cleveland and Detroit, use revenue sharing for such staples as police and fire fighters' salaries.

Edwin Griffin Jr., executive director of the Kentucky Municipal League, says most cities in that state lean on revenue sharing for 10 to 20 percent of their budgets. He says a cutoff would be ``absolutely catastrophic.''

Lincoln, Neb., Mayor Roland Luedtke says the loss of revenue sharing there, reserved largely for health and human services, threatens the continuation of such aid.

Most city officials say that without revenue sharing they would either have to raise property taxes -- encouraging more of those with means to go the suburbs -- or cut services.

The proposed 10 percent cut in Community Development Block Grants and the elimination of Urban Development Action Grants, money used to nurture development and restoration in distressed cities, would hit the Midwest hard. Two-thirds of the UDAG investments are made in the older cities of the Northeast and Midwest. Cleveland Mayor George Voinovich calls UDAGs ``the backbone'' of urban economic development.

``If we lost the UDAG money, it would be devastating; we're just beginning to see some results,'' says an assistant to Youngstown, Ohio, Mayor Patrick Ungaro.

Local officials in cities like Clinton, Tenn.; Montgomery, Ala.; Jacksonville, Fla.; and Atlanta say homeowners would likely pick up the tab for services now supported with federal revenue-sharing funds. Owners of houses with a market value of $50,000 could end up paying an extra $40 a year in Atlanta, says City Council member Richard Guthman. Two Southern city officials said some cuts are needed in domestic programs, but another said privately that more cuts are needed in the military budget.

Wayne Baker, a financial official in St. Petersburg, Fla., says that if federal taxes are cut as a result of cuts in federal programs and local taxes raised, it's just a change in ``who collects the tax.''

But most officials contacted in the South, even in cities with Republican mayors, criticized the proposed cuts in federal aid. Local surpluses, where they exist, will not cover the slack because they are ``snapshot'' (short-lived) surpluses, says Sam Austin, finance director for Montgomery, Ala.

As far as states sharing more funds with the cities, ``the state's not known for being the cavalry coming to the rescue,'' says Jacksonville, Fla., treasurer Richard Cohee. The huge cuts proposed in federal funding for public housing could result in ``a lot of homeless people,'' he said.

Reactions from urban experts in the Northeast to proposed federal budget cuts range from ``disappointing'' to Philadelphia Mayor W. Wilson Goode's ``devastating.'' Mayor Goode estimates the Reagan budget could mean a $200 million loss to Philadelphia proper and nearly $500 million to the area. The city could not make up the difference, he says, adding, ``If the budget is implemented as proposed, I will have no alternative other than to cut services.''

Officials of cities in New York, New Jersey, and Pennsylvania say the elimination of most mass-transit aid and the cutting of funds for Amtrak would mean higher fares for passengers and an unavoidable decline in services.

Calling the budget unfair to older urban areas of the Northeast, Goode says the White House needs to take a look at the unique problems these cities face.

In upstate New York, an aide to Erie County executive Edward J. Rutkowski says a more targeted approach to funding is needed. He points out that Urban Development Action Grants, which the Reagan budget terminates, have been ``tremendously useful'' in his county, which includes Buffalo.

The elimination of revenue-sharing funds would be the toughest for many urban areas. In a memo to Mayor Edward I. Koch, New York City budget director Alair Townsend said the loss of $203 million in fiscal year 1986 and $271 million annually thereafter would be ``the most harmful of the President's budget proposals.'' The memo said that ``the funds are currently used to pay for essential local services.'' New York City would not raise taxes, says budget director Townsend. Cuts would come in services, she explains, and the city would look for increased state support.

Municipal officials around New England warn that cutting some federal aid programs, on which their communities heavily rely, could be ``devastating.'' Mayors and other local officials generally doubt that all of the spending cuts proposed by President Reagan will be adopted by Congress. Nevertheless, those cuts could potentially cost the region some $500 million, and force local governments to come up with new sources of revenue or cut municipal services.

Most of Boston's $17 million in this year's federal revenue sharing is being spent on stepped-up police foot patrols. If this money dries up, it could jeopardize the city's public safety or force spending cuts elsewhere in the city's budget. Boston is already facing a $40 million to $60 million deficit in the current fiscal year.

Although all New England states except Vermont have budget surpluses, most are modest. Even if all surplus money were committed to help cities, the total would not be enough to replace federal revenue sharing alone.

In Portland, Maine, more than $18 million in federal aid is at risk. Local officials are concerned that elimination of federal funding might halt construction of a new fish pier, considered a key to the area's economic growth.

In Connecticut, where a state budget surplus in excess of $200 million is projected for the current fiscal year and a push for cutting state taxes is on, a special legislative session next fall is anticipated to help cushion the impact from federal budget cuts. Hartford, which would be especially hard hit by the Reagan budget proposals, stands to lose more than $3.4 million in revenue sharing.

City officials in Manchester, N.H., say they could be forced to make up more than $3.1 million if the proposed cuts are made. An end to revenue sharing would cost the city $1.9 million and could force significant municipal budget cuts or a $2.50 hike in local property taxes, says city coordinator John Hoden. Municipalities in Vermont would be hard hit, as the state projects a $35 million deficit this fiscal year. Chart: How federal aid to states would be cut under proposed Reagan budget (figures in millions)

'84 '85 '86 General revenue sharing $4,500 $4,500 $6 Community Development Block Grants $3,400 $3,400 $3,100 Urban Development Action Grants (UDAG) $440 $440 $0 Housing assistance $10,100 $10,800 $500 Public transportation * $4,200 $4,100 $1,400 Job training funds ** $6,600 $3,700 $2,900 * Includes bus and rail modernization money, formula grants and operating funds for mass transit, and other programs. ** Includes Job Corps, Basic Training, Summer Youth, and other programs. Source: US Conference of Mayors -- 30 --{et