WASHINGTON - Last year was a bad year financially for American cities and this year will be worse, according to a report released yesterday by the National League of Cities.

Budget shortfalls are plaguing a growing number of cities of all sizes, prompting city officials across the country to cut city services and raise taxes and other fees, according to the report. The report, entitled "City Fiscal Conditions in 1992," is based on a survey to which 620 cities responded.

"This year's survey found, for the first time, that over half of the cities and towns could not come up with enough current revenues to cover their current expenditures," Donald Borut, executive director of the league, said at a press conference yesterday.

The survey, which has been conducted since 1984, shows that 52.4% of city officials reported their city's revenues fell short of expenditures in the year just completed.

The survey also finds that a record 53.9% proportion of city officials expect their city's revenues to fall short of expenditures at the end of 1992. In addition, nearly 80% of the respondents said they are less able this year than last year to meet their cities' financial needs.

"It's a wonder that someone was able to answer otherwise," Glenda Hood, president of the league, said at the press conference.

The report notes that "cities cannot borrow to finance projected operating deficits," and must frequently draw from their reserves, or "ending balances," that were accumulated from past years' budget surpluses.

One of the most telling statistics about the severity of the 1992 fiscal crisis is the ending balance," the report says. "Cities ending balances, which act as cushions or shock absorbers when city revenues are generated at unexpectedly low levels, are predicted to be drawn down this year in a majority of cities," it says.

The report also note that the "next fiscal year will require more fiscal policy actin by these cities, since the cushion is expected to be considerably smaller next year - or, in many cases, gone."

The report says the growing fiscal crisis has forced city officials to take the following actions: 73.4% of the cities surveyed slowed scheduled increases in spending; 71.5% raised taxes or fees, or imposed new ones; 61.2% reduced capital spending; 44.2% froze municipal hiring; and 39.5% reduced their work force.

"The numbers and percentages contained in this report paint a troubling picture of the fiscal condition in America's cities and towns. But numbers aren't the whole story," Ms. Hood said.

Ms. Hood, who is also city commissioner of Orlando, Fla., said the steady decline of city finances translates into a equally steady, sometimes subtle, "deterioration" of the standard of living of city residents.

Ms. Hood pointed out that minor cutbacks in public service, such as a local library reducing its hours, may not seem like big sacrifices , until they are considered together. "These are indicators that point to the direction things are taking in our communities," he said.

In addition, the report said city officials named "four predominant factors" as the primary causes of current fiscal pressures on cities. They include: the rising cost of health benefits for municipal employees, the state of local economies, infrastructure needs, and unfunded state and federal mandates.

During the press conference, Ms. Hood and Mr. Borut said the statistics from this report and the recent urban violence in Los Angeles, among other things, show that the fiscal problems of cities should be put at or near the top of the national agenda. They expressed their hopes that the upcoming presidential election will help bring the plight of the cities to the forefront.

"The National League of Cities, and local government leaders of all political points of view, have a common message to all of the candidates for national office," Ms. Hood said. "It is time for a commitment of leadership and resources to build strength and security here at home.

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