The Long-Term Fiscal Outlook for New York City

In early 1975, budgetary crises necessitated both state and federal intervention to maintain New York City's financial operations. An Emergency Financial Control Board was created, giving the state an active role in city affairs, and federal loans of $2.3 billion were authorized.

The fiscal and economic base of New York City continues to deteriorate, and this deterioration is at the root of the city's problems. It will continue to be difficult for the city to cut expenditures. To achieve a balanced budget in fiscal year 1978 will probably require major administrative actions and policy shifts at the federal and state levels. Barring such shifts, 1977-1985 will be an extremely difficult period for the city. Declaring municipal bankruptcy will not solve the city's problems. The federal government should explore ways to generate better municipal fiscal information for better decisionmaking at all levels of government. A number of city efforts to improve its economic base have already occurred, and alternative federal policies toward urban areas are suggested.