Despite a projected record $82 billion in federal aid next year, America's troubled cities will be unable to finance the long-term development needed to broaden their tax bases and create permanent jobs in "sizeable numbers," according to a Brookings Institution economist.
Testifying before the Congressional Joint Economic Committee yesterday, Richard P. Nathan said that total allocations in the 1978 budget for federal grants of all types to so-called "hardship" cities would show an increase of 135 per cent over 1974-75, the latest year for which figures are available.
In the case of Newark, the $78 million grant represents a four-fold rise. St. Louis would get 247 per cent more. By comparison, even a well-off city like Phoenix would get 94 per cent more that it did three years ago.
Efforts by the federal government to stimulate economic recovery in the cities have made some impact, according to another study released yesterday by the Joint Economic Committee. This found that municipalities are no longer cutting their public services and that city employment has stablized.
On the negative side, tax revenues are increasing very slowly and capital expenditures have decreased by as much as 13 per cent in some of the hardest hit cities. Out of 67 of the country's largest cities, 26 were found to have "severe symptoms of fiscal distress which, if not treated in 10 years, could be irreversible." The cities were not identified.
Brooking's Nathan warned that if Congress decides next year to turn off the current economic stimulus - some programs are automatically suspended if economic conditions improve sufficiently - cities like Cleveland could experience real trouble. The city's $110 million in federal aid amounts to 90 per cent of its $122 million general fund expenditures.