Pittsburgh's long-strapped government has a healthy surplus, but shouldn't lower its guard against overspending, city Controller Michael Lamb said yesterday in presenting the yearly audit.

"From an annual perspective, maybe it's the best we've ever been," said Mr. Lamb of the $89.5 million bank balance the city had at year's end, 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, who took office in January, said last year was the first since 2003 in which city spending edged up. Additionally, the city gained no ground in bridging the gap between the $386 million in its pension fund and the $862 million it should ideally contain to cover obligations to past and current employees.

"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 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 divide health insurance and workers' compensation costs among the departments, giving directors incentive to reduce them, he said.

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's definitely a problem," he said of the debt. The city is relying more on payments from its authorities, even as some of those entities get deeper into debt, raise rates, or both, he said.