How strong leaders in City Hall can keep older cities running in the black

The fiscal crunch facing many of the nation's older northern cities is not the inevitable result of lost jobs and population. These losses do reduce the tax base, and new sources of revenue are hard to come by. But University of Chicago sociologist Terry Nichols Clark contends that it is political spending decisions made by city leaders that largely determine whether or not fiscal strain will follow.

''A mayor can have a major impact on how city government responds to the changed circumstances,'' he says. ''But what's politically feasible and easy to do in one city can be very difficult in another.''

Mayors of some Northern cities, including Pittsburgh, Waukegan, Ill., and Gary, Ind., managed to take a new measure of the situation in the 1970's and either cut spending, raise taxes, or squeeze more out of each dollar.

But many city leaders, he says, bowed to pressures from unions and other urban special interest groups such as the elderly and kept right on spending.

To balance the books, many gave in one area and pulled back in another. The net effect was to reduce the quality of city services.

Heavily unionized Cleveland, for instance, which lost a large number of middle-class residents in the early 1970's and went into default in 1978, had raised the salaries of municipal workers 20 percent between 1974 and 1977, but reduced the number on the city payroll by a similar percentage. Detroit, which hiked city wages 40 percent in the same span, also made major employee cuts.

Such statistics come easily to Dr. Clark these days. He has just finished a major book on the subject called ''City Money,'' published by Columbia University Press. It is co-authored by Lorna Crowley Ferguson, who earned her PhD in sociology at the University of Chicago and currently works in the public finance department of John Nuveen & Co., a municipal-bond dealer.

The authors' analysis is based on intensive surveys and systematic tracking of fiscal and political policies in 62 American cities over a 21-year period. The tracking was done by the Comparative Study of Community Decision-Making at the University of Chicago's National Opinion Research Center (NORC).

Clark is director of that study. Boxes of computer tapes, cards, and printouts that document the findings are stacked on shelves and all available floor space in his office. Partly because the NORC has followed the same cities over so long a period, mayors of those cities tend to be intensely interested in the findings. Clark was late for an interview, for instance, because the mayor of Milwaukee called him to discuss some fiscal points in the book. And, says Clark, when he handed a copy of the tome (it includes a 42-page bibliography) to Chicago's Mayor Washington the other day in the mayor's kitchen at home, Mr. Washington, who was getting a haircut at the time, indicated he would be up late for the next few nights reading the book.

In their research Drs. Clark and Ferguson found that state and federal aid has done little to ease municipal money troubles, and that the cycles of inflation and recession have little effect on city coffers.

''Most city revenues tend to go up about as fast as inflation, while property taxes do not go down in a recession,'' Clark explains.

Most city belt-tightening, according to the authors, has come since about 1974.

One of the earliest and most dramatic fiscal turnarounds of an older Northern city, he says, occurred in Pittsburgh under the 1970-77 administration of Mayor Peter Flaherty. Though a Democrat in a unionized city, Mayor Flaherty campaigned on a promise of more efficiency in city government. He weathered a citywide strike to make good on it: reducing taxes, randomly visiting work sites to be sure all employees were awake and toiling, and reassigning many of the city's best workers to powerful problem-solving positions.

''There were within the city many workers who really wanted to improve productivity and efficiency - that's often the case,'' Clark notes.

Gary, Ind., has earned a singular star on the authors' charts for reducing city spending by 10 percent a year between 1974 and 1977. It is the largest decrease of all 62 cities surveyed. There, Gary Mayor Richard G. Hatcher expanded the city work force, but kept compensation at far lower levels than in many more unionized cities.

In Waukegan, Ill., leadership also played an important role. Clark says that Mayor Bill Morris, who kept city spending well below average between 1977 and 1981, often spells out in detail just what services cost, so that citizens know how their money is being spent and the consequences when they want more services. In that atmosphere of increased trust, he has trimmed some services and expanded others, including pothole repairs. The mayor also sees to it that city workers are told the dollar equivalent of their fringe benefits on their paychecks.

''It's very important for a mayor to work well with municipal employees - being firm but cooperative,'' Clark says. ''In some cities you can sort of see a pride and enthusiasm among workers as you walk around. In others you may sense some cynicism and alienation. The top leadership can really make a difference in creating the right kind of climate.''

Many Western cities, such as San Diego, Palo Alto, Calif., and Phoenix, he says, have faced up to the need to limit spending by trying to increase productivity. All have highly professional fiscal management systems and often hire consulting firms to study how city services can be made more efficient. Clark says that San Diego alone - which he insists was operating efficiently to start with - has been able to cut spending by 10 percent in several categories with no reduction in service.

''If San Diego can do it, so can virtually every city,'' he says.