A number of major states and cities continued to thrash about last week, making little headway in their efforts to gain control of their revenues and expenses. Their ineffectiveness can only increase the doubts in the municipal bond market and push interest rates and borrowing costs higher.

New York City, which ended its fiscal year yesterday with an alleged budget surplus, was the sorriest case. Mayor Dinkins and the city coucil argued over spending cuts and higher taxes for fiscal 1992. The New York State Senate refused to budge on the city's request for a higher income tax. Concessions from municipal unions seemed remote. The Financial Control Board appeared anxious to avoid a takeover. The possibility of selling bonds to fund the fiscal 1992 deficit (but only as part of a credible, tough long-term plan) hovered in the background.

To say the least, it was a difficult mess to straighten out, a fiscal quagmire, and Mayor Dinkins did not help when he told a radio audience: "What we've got to do is sort of tread water." Bond market participants -- investors, rating agencies, traders, pundits -- wated something more forward-looking than that.

We cite New York City's difficulties because they are the most obvious and the toughest facing the municipal market today, but other states, cities counties, and towns foundered as they worked to make fiscal ends meet.

New Jersey and Connecticult legislators wrestled with tax proposals and layoffs.

The Bureau of the Budget of Illinois, a tripe-A state, revealed that state revenues are falling about $329 million short of estimates made in March.

Standard & Poor's lowered the bond rating of Suffolk County, N.Y., to BB from BBB, degrading the securities to junk, a status hardly in keeping with the image of a populous, rich county. The agency cited failure of the county executive and legislature to agree about the severity of the problem and what to do about it.

Bridgeport, Conn., which believes bankruptcy will help solve its financial difficulties, took its case to court.

Political leaders and financial officers disagree, yammer, and accomplish little. Time goes on. Streets become dirtier, and bond raters issue warnings. The slack economic background, of course, makes effective discourse and action unusually difficult, and the financial world, faced with overindebtedness everywhere, continues to reveal its underlying shakiness. With risks rising and clear thinking and effective action scarce, borrowers will pay more.

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