A Many-Sided Squeeze

Golden anniversary aside, there was little to celebrate as the National League of Cities convened its 50th "congress of cities" in Houston last week. Some 1,500 mayors, city managers and councilmen told grim tales of how inflation and recession are combining to raise costs and erode tax bases. Even as they met, the administrators got a backdoor reminder of one of their bigger problems: increased militancy by public employees. Houston's bus drivers were on strike, demanding higher pay.

Labor trouble is only one element in a many-sided squeeze on the municipalities. Some other difficulties:

> City building projects are almost at a standstill as soaring costs far outstrip targeted estimates. Rising costs have forced San Francisco to postpone indefinitely construction of an 18,000-seat sports arena. The Washington, D.C., rapid-transit system, budgeted at $2.5 billion five years ago, will cost at least $4.5 billion, perhaps $6 billion, before it is fully completed in 1981. Prices of goods that cities buy are also steep. Environmental and transportation equipment was exhibited for the officials in Houston. But reaction to items like a 19-seat minibus was tempered: mayors kicked the tires and winced at the $19,000 price.

> Cutbacks of services and layoffs of municipal employees are either planned or under way in many cities.

Newark Mayor Kenneth Gibson recently ordered a 25% cutback in budget requests from all city departments. New York City is contemplating trimming 1,510 jobs as squabbling officials fail to agree on whether the city's deficit this year will be $430 million or $650 million. Last week the city was forced to sell $600 million in short-term notes at a record 9.47% interest--and that despite the fact that interest on the notes is exempt from federal income tax.

> Revenue sharing, accounting for 4% to 5% of municipal budgets, is flowing into cities at levels set in October 1972, when the law was passed. Since then, the cost of running city governments has swollen as much as 15% in some urban areas. Many cities raise most of the rest of their money from property taxes, which are often based on assessed valuations that have not been raised to reflect inflation.

No subject, though, so worries city executives as their labor relations. Like workers everywhere, city employees are pressing for fat wage settlements--the range has lately been 8% to 10%--and often ignoring legal bars to striking.

Moreover, Ralph Flynn, executive director of the 2 million-member Coalition of American Public Employees, predicts certain passage by Congress next year of a law that would give public employees the same bargaining rights as workers in the private sector. The legislation, now in House and Senate committees, would allow city employees to choose between striking or going to arbitration in the event of a negotiating impasse. "There will be strikes," predicts William H. McClennan, president of the International Association of Firefighters.

City officials vow to be tough bargainers. "A new militancy on the part of municipal employees requires a new militancy on our part," says Donald H. Weinburg, personnel director for Washington, D.C. But there are doubts as to how successful the administrators will be. The AFL-CIO has melded 25 government unions into a new public-employees department, staffed by seasoned negotiators who will square off against city officials unaccustomed to hard bargaining. Says Carroll Harvey of Washington's Match Institution, an urban-planning agency: "City negotiators will be sitting down with some of the hardest-nosed pros in the labor business."

Quirky amendments to the federal Fair Labor Standards Act also threaten to increase city costs by extending minimum-wage and overtime provisions to public employees next year. Policemen, for example, will be paid overtime for hours worked beyond 60 in any given week, even though some of the first 60 hours were spent in uniform working not for the city but for a department store as a guard. Salt Lake City Mayor EJ. Garn estimates that the amendments will cost his city $500,000 next year in increased pay alone and more than $3 million three years from now in overtime. This week the League of Cities will file suit in U.S. district court in Washington, D.C., seeking to have the controversial amendments ruled unconstitutional.

Cities do have some ways to stretch their budgets. They can, of course, raise taxes, and some are doing so, despite the intense unpopularity of that step. Atlanta Mayor Maynard Jackson, for one, is having to back off from his oft-repeated pledge that there would be no increase in property taxes while he was in city hall. Cities could also shift from outmoded "line-item" budgets--which simply list how much is to be spent for salaries, how much for construction and so on--to "performance" budgeting that stresses goals and priorities. When they made that switch four years ago, Fort Worth officials decided deliberately to undervalue taxable property, in effect creating a reserve of untaxed value for hard times. Now that the hard times are here, the city has provided for an $8 million increase in its budget to $83 million by shifting to "realistic" property assessments. More such innovation is clearly called for. Otherwise, U.S. cities face inflation and recession with all the weaponry of a retired person living on a fixed income.

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