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So you have 5 cities. That means if your city cap is 3, all your cities are operating at a 50% loss.
Also, every hero over your hero cap greatly increases gold upkeep. So if you have 7 heroes on 5 cities, that means you're paying a lot more for the heroes.
In summary, you f-ed yourself over by going over hero and city cap.
Might be too late to salvage it, so view it as lesson learned.
the enemy leader, sounds like a main faction, something like your own leader, they can be killed in combat, as can your own leader, but unless you kill them AND take their throne city, they will keep coming back, same as with you