A Supreme Court decision requiring towns and cities to comply with federal wage-hour laws will cost municipalities more than $1 billion and must be modified, the National League of Cities said yesterday.

The league's president, Cleveland Mayor George Voinovich, called the threat of enforcement and retroactive penalties "anything but fair" and urged prompt passage of legislation to change the court decision.

On Feb. 19, the Supreme Court ruled, 5 to 4, that the provisions of the Fair Labor Standards Act apply to state and local governments, affecting about 7 million local and state employes and several million volunteers.

The Labor Department said in June that it intended to begin enforcing strict wage-hour accountability standards in October, rejecting all suggested modifications and requests for a phase-in period. It also said any liability would be retroactive to April 15.

League officials said the most difficult situation will be faced by smaller communities and outlying jurisdictions that rely on volunteer fire and rescue units.

Many volunteers, for example, are given a small payment for responding to calls, as well as funds to cover equipment, training and travel to calls. The federal regulations, however, would limit payment to $2.50 per call and deny reimbursement for incidental costs unless all are documented.

Voinovich said that, despite requests, the Labor Department "refuses to establish regulations that recognize the problems involved in running a police or fire department.