WASHINGTON -- The budget woes of state and local governments may not be as bad as many people think, and probably will not do much to impede the unfolding recovery, according to an analysis prepared by Goldman, SAchs & Co.

The report, written by Robert Giordano, director of economic research, contradicts current thinking by many private economists, who contend that states and localities are facing serious economic problems that could stall or derail the economic recovery.

The report concludes that if state and local budgets got the same accounting treatment as the federal budget they would actually show a surplus rather than a deficit.

Moreover, the report says a sizable portion of the spending by state and local governments includes outlays financed by bond market borrowings rather than tax receipts. Annual capital expenditures are estimated to be running aroung $80 billion, or more than 10% of total state and local spending.

"The problems for the state and local governments are real, but for the U.S. economy as a whole, they're not widespread enough or deep enough to act as a major barrier to national economic recovery," said M.r Giordano in an interview. He wrote the report last month for the Goldman Sachs economic research group.

Private and government economists have been citing the cutbacks by state and local governments with increasing frequency, saying that as spending is pared and workers lose their jobs, the U.S. economy in general suffers. In addition, economists warn that large tax increases imposed in some states threaten to crimp consumer spending.

The weakening of the state and local government sector was cited in the latest "beige book" report of the Federal Reserve Board in assessing U.S. economic conditions. In the August unemployemtn report released on Friday, the Labor Department says state and local governments have slashed 100,000 jobs from their payrolls since May. More job losses are expected.

By the first quarter of this year, municipal deficits were piling up at a record annual rate of $41 billion, according to calculations by some economists.

But such calculations, the Goldman Sachs report says, exclude the huge and growing surpluses in annual pension funds that are being accumulated by state and local governments. These surpluses total an estimated $60 billion, an all-time high. "In reality, municipal retirement accounts can be, and are, tapped to help square operating imbalances during transitory revenue shortfalls," the report says.

In calculating the unified federal budget, the Social Security surplus is included, and that is the way the bond market routinely assesses the federal government's fiscal position.

The report also notes that state and local budgets include spending on schools, hospitals, and other other facilities that are usually financed by bonds rather than taxes. As a rule, spending on such projects should not be figured in calculating the budget deficit, the report says. Interest expense on the bonds is properly part of the budget, but it is typically a minor item and offset by interest income.

Excluding capital expenditures, state and local governments are running annual budgets with surpluses that total an estimated $35 billion, not the $41 billion deficit that has been widely cited, the report says.

The report also argues that the current municipal budget crunch is largely concentrated in "relatively few areas of the nation," particularly a few prominent industrial states such as New York and California. On a regional basis, the New England and mid-Atlantic states have general fund shortfalls, but all other regions recorded surpluses at the end of the fiscal year in June.

Last week Texas cut back a Sept. 18 tax and revenue anticipation note sale after the state closed fiscal 1991 with a near-record $1 billion cash balance.

The good news for state and local governments is the message that because the recession has not turned out to be as severe as the downturn of 1981-1982, revenues should recover fairly quickly this time. "State and local budget difficulties should prove to be self-correcting," the report says.

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