U.S. cities face tough questions in budget squeeze

Philadelphia, legally required to balance its roughly $4 billion budget, faces deficits of $175 million next year and $1 billion over the next five years. Those gaps, announced in early January, opened despite city action to plug similar-sized shortfalls only two months earlier. Officials say federal money from President Barack Obama's economic stimulus will help with capital projects but not with the city's operating budget.

"PETTING THE LAMB"

The speed and severity of the downturn in city tax receipts, coupled with increased spending on pensions and other benefits, forced officials to consider new ways of balancing the books.

The same forces are hammering city budgets across the United States, said Miami Mayor Manny Diaz, current president of the U.S. Conference of Mayors.

"I hear from mayors all over the country who are forced to reduce the frequency of trash collection, close local libraries or lay off police officers in communities that need them now more than ever," he said.

In Chicago, officials have been giving frequent updates on the growing budget gap to brace the public for more bad news.

In Philadelphia, city officials say they will use the results of their public meetings to help make decisions.

But some are suspicious. Kirlin called the public meetings "rigged" and said they were nothing more than a public relations exercise. "They are petting the lamb before they slaughter it," he said.

(Additional reporting by Karen Pierog in Chicago; editing by Alan Elsner and Mark Egan)