Cities' Bottom Lines Fatter, but Problems Also Grow Apace

THE good news in the nation's cities is that most municipal budgets have recovered from troubled years to a stable financial condition.

The bad news is that many locally elected officials see their lean budgets outmatched by social problems centering on youth violence, teen pregnancy, and family instability.

Local government stands at the end of the line in the United States federal system, and in the past decade an increasing share of the load of funding government services has been passed on to municipalities.

Most city budgets are no longer crushed under the burden because of the improved economy, tough-minded budgeting, and some higher taxes and fees.

But a new national survey of local elected officials by the National League of Cities (NLC) found increasing levels of concern about youth and crime, families, AIDS, and local infrastruc- ture.

So even as the bottom lines of most city budgets are looking better, a growing number of local officials are concerned about their cities' fiscal condition.

Take Tucson, Ariz., for example. The health of its city budget is among the most improved in the country since its general-fund balance hit a postwar low of $260,000 in 1990. Now the balance is up around $11.4 million.

Yet, says Tucson's director of budget and research Ned Zolman, ``We've got a lot of things we need around here, and that's just a drop in the bucket.''

The city would badly like to put more police on the streets, fund more youth programs to counter a growing gang problem, improve libraries, and buy more computers to oil the efficiency of its procurement department, Mr. Zolman says.

Instead, it has pulled its budget back into shape by putting off repairing roofs, not replacing swimming-pool filters, and not buying new fire trucks.

Ann Arbor, Mich., is another city among the most-improved financially. Its general-fund balance was about 25 percent higher last year than the year before, which was better yet than its low point in 1988, when the city was in the hole.

Ann Arbor, like 53 percent of the cities in the new survey, has not had to exact a serious cut in public services or defer maintenance, according to budget director Alan Burns.

But it has been ``cutting out some of the niceties,'' he says. The city spends $10,000 to refurbish old dump trucks instead of $40,000 to buy a new one, for example. It cut down on the use of city vehicles and the purchase of printing materials. But most of all, Mr. Burns says, the city is very conservative in estimating how much revenue it will bring in, so that its budgets remain realistic.

Even if city tax rates and fees are not raised this year, two-thirds of the officials surveyed expect they will be able to maintain service levels.

A major part of the burden that cities have had to adjust to was carried by the state and federal governments in the past. For the second year in a row, more officials say unfunded mandates from federal and state governments are the worst problem they face.

Tucson carries at least $25 million in lost revenues or increased costs because of changes the federal government, the state, or the courts have made in the past decade, budget director Zolman says. The biggest part of that, he says, is the loss of revenue-sharing funds from the federal government that dried up at the end of the Reagan administration.

Ann Arbor is spending $17 million to improve waste-water treatment - $12 million of which is to build an ozonization plant instead of a chlorination plant, in order to meet federal requirements. The Clean Water Act requires a plant that combats a virus not yet encountered locally, budget director Burns says. Local officials would rather build the cheaper chlorination plant.

While most cities have reached a point of stability in their budgets, some of the biggest cities have not. New York, Los Angeles, Washington, and Cleveland are in extremely tight fiscal straits, says Mike Pagano, a University of Miami, Ohio, political scientist who tracks city finances for the NLC.

Of the most deteriorated conditions named by local officials in the new NLC survey, five of the top six concern public safety.

Nearly two-thirds of the officials, when asked to identify the top five measures most likely to reduce crime, reply ``strengthening and supporting family stability.''

Just under half of them cite ``jobs and targeted economic development,'' which was the next most-popular measure.

Also commonly cited: more police officers, after-school programs, and neighborhood-watch programs.