Pittsburgh Controller Michael Lamb said today that the city has a healthy surplus, but shouldn't lower its guard against overspending.

"From an annual perspective, maybe it's the best we've ever been," said Mr. Lamb, as he formally released the city's annual audit, showing an $89.5 million bank balance, even after $60 million was separated out to pay for future capital improvements. "But we've got these problems out there . . . This is the moment when council and the mayor have to seriously look at controlling costs."

Mr. Lamb said last year was the first since 2003 in which city spending edged up. Additionally, the city gained no ground in efforts to bring its pension fund's balance up to recommended levels.

"From here on out, expenses are going to continue to rise unless we do something significant," he said. "The most logical way to do that is to continue efforts to combine and cooperate with other governments."

He said the city should consummate efforts to combine its delinquent tax collection efforts with those of Allegheny County, the Pittsburgh Water and Sewer Authority and perhaps the school district. Combined city-county tax collection, recreation and police and fire training should follow.

The city should also adjust its budgeting process so that health insurance and workers' compensation costs are divided among the departments, rather than lumped together so that they are harder to assess and control.

Mr. Lamb also warned that even though the city's debt has dipped to $764 million, debt at its related authorities seems to be on the upswing. The annual audit shows the combined debt at the Urban Redevelopment Authority, the Stadium Authority, the Parking Authority and the water authority is $845.5 million. The water authority owes $100 million more than it did in 2000, and plans to borrow more.

It was Mr. Lamb's first audit release as controller.

More details in tomorrow's Pittsburgh Post-Gazette.