CITIES: Limited Liability

Every year, come budget time, New Yorkers are maltreated to a stagy, depressingly familiar contest between Mayor John Lindsay and Governor Nelson Rockefeller. The mayor more or less threatens to shut down New York City for good unless he gets more money. The Governor responds with sympathetic noises about how he would like to help, but what can a fella do? Then somehow the two, with the reluctant assistance of the state legislature, manage to scrape together enough money to keep the city operating at its usual siege level.

This year the wails from city hall are more plaintive than ever, and with good reason. Amid inflation, recession, dizzying union demands and the largest payroll and welfare rolls in the nation, the city has lost $500 million in services because of cutbacks made by the conservative state legislature. Lindsay's first riposte was to lay off 2,800 employees, most of them temporary or part-time. Then he took cool aim at Albany and fired. Unless there was a drastic restoration of cuts in city funds and a sufficient extension of the city's taxing powers to provide an additional $880 million this year, Lindsay warned, he would be forced to discharge 90,000 employees, or nearly 25% of the city's payroll of 380,000.

Pinch the Poor. Lindsay buttressed his appeal to the Governor with what he called four budget options, a kind of fiscal edition of a Chinese menu. The most draconian assumes no restoration of aid or new city taxes; it would call for, besides the elimination of 90,000 jobs, the closing of eight city hospitals, not admitting a freshman class next fall at the City University of New York, and eliminating almost all city-sponsored cultural and recreational services. From there the mayor's options become increasingly more palatable until Option 4, a Utopian dream that has the state restoring all budget cuts, increasing aid in an amount proportionate to the $400 million increase the city received last year, and allowing the city a full new tax package.

Most observers feel that a compromise will be reached between Option 3, the "ground zero" no-change budget, and the fairly nightmarish Option 2. This option would see 50,000 jobs cut, with 12,000 hospital workers and 11,000 policemen leading the list, five hospitals and more than 20 drug-treatment centers closed, and an end to open enrollment at the City University, which exiting Chancellor Albert Bowker says would in effect close the university. The list underscores the obvious: it is the city's poor who will most feel the pinch of declining services.

There may be a touch of bluff in Mayor Lindsay's course of action, but precious little. "This is for real," said the mayor. "The problem is much worse than it's ever been before." His budget director, Edward Hamilton, backed him up. In the first place, Hamilton points out, state and federal aid to the city will not increase as much as in the past; also, the city has just about run out of items it can tax.