Cities across the country have canceled hundreds of millions of dollars in capital construction projects, a further setback in the effort to rebuild crumbling roads, bridges, schools and sewers, a congressional report says.
The survey of 301 cities, prepared for the Joint Economic Committee, found that high interest rates and tight budgets caused a 60 percent reduction in planned capital projects last year. The cutbacks included the cancellation of 73 long-term bond issues totaling $685 million, or 15 percent of what they actually borrowed last year.
The survey, the latest on the failing health of American cities, said that local officials have planned a 30 percent increase in capital spending this year, but that poor economic conditions probably will force much of this work to be postponed again.
Rep. Henry S. Reuss (D-Wis.), the committee chairman, described these delays as the result of a "survival-of-the-fittest approach" to urban policy by President Reagan.
Reuss said Congress ought to provide greater capital assistance to distressed cities next year. He supported his party's recent effort to create public service jobs to repair roads and bridges.
"The administration, though, has put cities on notice -- the federal government will not come to their rescue," Reuss said. He said Reagan's policy is that cities without strong economic bases and natural resources "apparently are not worth saving."
Cities have found it increasingly difficult to market their bonds, in part because investors have been flocking to new tax shelters and industrial revenue bonds, the report said. Deborah Matz, one of the authors, said the study was prepared before the recent dip in interest rates, but she said only a major decline in rates would have much effect on municipal bonds.
One of the survey's most sobering findings, Matz said, is that city officials expect revenues to increase by only 1.3 percent this year, far less than in previous years and not enough even to keep pace with inflation. At the same time, these officials predicted that their expenses would rise 7.8 percent.
The report suggested that the recession and the high cost of credit already have taken their toll. Two of every five cities surveyed, including nearly half the largest cities, said they faced deficits in 1981. Sixty-three percent of these larger cities said they expect to be in the red this year.
The cities are being squeezed further by a loss of government aid. City officials said they expect a 12 percent drop in federal aid this year and an abrupt slowdown in state aid, which jumped by a surprising 10 percent last year to help offset some of the federal cutbacks.
One result of the slowdown in capital spending is that more city officials are imposing fees on those who use libraries, swimming pools, parks and other facilities. These user charges were up 15 percent last year.